Costello & Anor v Macdonald & Ors

Costs following a successful appeal may be apportioned by issue and party rather than awarded wholesale. A party who successfully defends a claim may recover its defence costs while receiving no costs on a counterclaim concerning only other contractual parties. An appeal’s success does not automatically alter another party’s existing costs liability. Costs should be assessed on the standard basis if not agreed where the circumstances do not justify an indemnity basis or payment on account.

The appellants appealed from a decision of Recorder Abbott in the Bournemouth County Court. The Court of Appeal allowed the appeal on 29 July 2011, refused permission to cross-appeal, and adjourned consequential costs issues concerning the claim, counterclaim and cross-appeal. The remaining issues were how costs should be allocated between the Costellos, the respondents and Oakwood, and whether any costs should be assessed on an indemnity basis or paid on account.

This was the judgment of the Court.

1. The respondents were ordered to pay the Costellos’ costs of the application for permission to cross-appeal. The appeal had been successful, so the Costellos had successfully defended the claim against them.
2. The Costellos had been partly successful on the preliminary issue before the Recorder. The assessment of their costs of that issue at £5,000 was not disturbed. The respondents were also to pay the Costellos’ other costs of defending the claim, excluding the balance of their costs on the preliminary issue.
3. No order for costs was made in favour of the Costellos on the counterclaim. The counterclaim concerned damages for breach of contract and was properly an issue only between the contractual parties, the respondents and Oakwood.
4. The Recorder’s order requiring Oakwood to pay the respondents’ costs of the claim, other than costs attributable to the claim against the Costellos, and of the counterclaim was left unchanged. The Costellos’ success on appeal did not affect Oakwood’s liability, and Oakwood had been refused permission to appeal.
5. All costs awards were to be assessed on the standard basis if not agreed. The circumstances did not justify assessment on the indemnity basis. There was also no order for payment on account of costs incurred below.

1. Court of Appeal (Civil Division): In [2012] EWCA Civ 86, the appeal had been allowed on 29 July 2011; the Court then determined the consequential costs issues and refused permission to cross-appeal.
2. Bournemouth County Court: Recorder Abbott determined the preliminary issue and made costs orders concerning the claim and counterclaim. The Court of Appeal left the relevant assessment and Oakwood’s liability undisturbed.