Churchill Insurance Company Ltd v Fitzgerald & Wilkinson

Under the Civil Procedure Rules 1998 Pt 44.3, the unsuccessful party will ordinarily pay the successful party, but the court may make a different order after considering all the circumstances. Where success is qualified or divided across issues and stages, costs may be apportioned to reflect what each party won and lost, changes in position during the litigation, and the possibility that an apparent victory may yield no recovery. A helpful intervention does not necessarily attract an order for costs. Where statutory incompatibility was not attributable to either principal party, the just order may be no order as to the intervener’s costs.

These proceedings concerned costs remaining after the Court of Appeal’s judgment on 24 August 2012 in two appeals. In Churchill Insurance Company Limited v Wilkinson, Churchill appealed a preliminary-issue decision of Mr Justice Blair concerning the compatibility of section 151(8) of the Road Traffic Act 1988 with the European Directives and case law. In Evans v Equity Claims Limited, Evans appealed an order of His Honour Judge Gregory, but the compatibility issue had not been fairly argued before him. Following a reference to the CJEU, the Court of Appeal preferred the insurers’ construction of section 151(8) and reserved costs. The central issues were the identity of the successful party, the effect of qualified success and changes of position, and the costs of the Secretary of State’s intervention.

Costs determined. Lord Justice Aikens delivered the judgment of the court.

1. Under Civil Procedure Rules 1998 Pt 44.3(2), the general rule is that the unsuccessful party pays the successful party. The court retains discretion to make a different order after considering all the circumstances, including the matters identified in Pt 44.3(4)(a)–(c).
2. Success must be assessed in the context of the issues and stages of the litigation. In the Churchill appeal, the insurers were successful in obtaining acceptance of their construction of section 151(8) of the Road Traffic Act 1988, but their success was qualified. The European Directives and case law remained relevant, the insurers had lost arguments at earlier stages, and their apparent victory might ultimately produce no recovery from the insured or victim. These matters justified apportioning costs rather than making a single order in favour of one party.
3. In the Churchill proceedings, Churchill recovered 50% of its costs before Blair J. Churchill paid 50% of Wilkinson’s costs of the first appeal and of the CJEU reference. Wilkinson paid 50% of Churchill’s costs of the second appeal.
4. In the Evans proceedings, the costs order made by His Honour Judge Gregory was left undisturbed because the relevant issue had not been argued before him. The costs of the first appeal, the CJEU reference and the second appeal were ordered on the same basis as in Churchill v Wilkinson.
5. The Secretary of State’s intervention was helpful, but the literal form of section 151(8) was incompatible with the European Directives. That incompatibility was not attributable to either principal party. The just order was therefore no order as to the Secretary of State’s costs. All costs were on the standard basis and subject to detailed assessment if not agreed.

1. Court of Appeal (Civil Division): The court’s judgment on the substantive appeal was handed down on 24 August 2012, with costs reserved. The present judgment, [2012] EWCA Civ 1465, determined the outstanding costs issues.
2. CJEU: A reference was made after the first appeal. The national court subsequently applied the CJEU ruling and made the resulting costs orders.
3. Manchester District Registry, Queen’s Bench Division: Mr Justice Blair decided the preliminary issue in the Churchill proceedings. The Court of Appeal treated Churchill as having overturned his construction of section 151(8), while accepting that the European Directives and case law were relevant.
4. Walsall County Court: His Honour Judge Gregory made the original order in the Evans proceedings. That costs order was not disturbed because the relevant issue had not been argued before him.