Hutchinson & Anor v Neale & Anor

The successful party remains presumptively entitled to its costs despite having advanced a dishonest case. The court must evaluate the nature and degree of the misconduct, its relationship to the issues, and its effect on the parties’ costs before departing from the general rule.

Available measures include disallowing costs attributable to the dishonesty, ordering payment of the opponent’s resulting costs, and imposing a proportionate additional penalty. The order must avoid double recovery or double punishment. A Calderbank offer founded on an unacknowledged false accusation may receive little or no weight.

The defendants successfully defended a boundary claim and obtained judgment on their counterclaim in Birmingham County Court. The trial judge nevertheless made no general costs order in their favour. He found that they had altered a plan, falsely accused a claimant of the alteration, and advanced other improper or unsuccessful issues.

The defendants appealed against the resulting costs orders. The central issue was how far their dishonesty could justify displacing the usual order that the unsuccessful claimants pay the successful defendants’ costs.

1. Appeal allowed in part. The trial judge’s general costs order was replaced by an order that the claimants pay 70% of the defendants’ costs on the standard basis, subject to detailed assessment. The defendants’ dishonest conduct justified substantial adjustments, but did not justify depriving them of every part of the costs reasonably incurred in successfully defending the claim.

2. The starting point under rule 44.3(2)(a) of the Civil Procedure Rules 1998 is that costs follow the event. There is no general rule that dishonesty by a successful party replaces that starting point. The court must evaluate the nature and degree of the misconduct, its relevance to the issues, its effect on the trial, and its tendency to cause an unwarranted increase in costs.

3. The court may disallow the dishonest party’s costs of advancing the false case, order that party to pay the opponent’s costs of establishing the dishonesty, and impose an additional proportionate penalty. The order must be framed to avoid double counting on detailed assessment. The principles identified in Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama AS were accepted.

4. The claim had not been caused by, or founded upon, the defendants’ misconduct. It failed on the claimants’ primary boundary case, which was independent of the altered plan. The defendants had not conducted the proceedings as a whole as an abuse of process. The proper starting point was therefore an award in their favour, reduced to exclude the dishonest and unsuccessful aspects of their case.

5. The trial judge was entitled to order the defendants to pay, on the indemnity basis, the claimants’ costs of answering the defendants’ denial of responsibility for the altered plan and their false accusation against Mr Neale. He was also entitled to treat the alleged 2005 oral boundary agreement as misconduct. The separate indemnity-costs award concerning the historical Ordnance Survey maps was unwarranted because advancing that expert-supported issue did not amount to misconduct, although the defendants’ own costs of that unsuccessful issue could be disallowed.

6. The defendants’ non-compliant Part 36 offers had little weight as Calderbank offers. They had been advanced without acknowledging the defendants’ dishonesty and while falsely accusing the opposing party. Giving the offers their usual favourable consequences would have defeated justice.

1. Court of Appeal (Civil Division): The appeal was allowed in part. The County Court’s costs order was varied so that the claimants were to pay 70% of the defendants’ costs on the standard basis, while specified costs consequences of the defendants’ misconduct remained.

2. Birmingham County Court: HH Judge Simon Barker QC dismissed the boundary claim, gave judgment and declaratory relief for the defendants on their counterclaim, and awarded £250 damages. He subsequently made no general order as to costs, but ordered the defendants to pay specified costs resulting from their dishonesty and other issues.