Templeton Insurance Ltd & Anor v Brunswick & Ors (No 4)

Costs remain a discretionary remedy governed by all the circumstances. The general rule that the unsuccessful party pays the successful party remains the starting point, but the court may adjust recovery where allegations or issues were unreasonably raised, pursued or defended, or where conduct caused unnecessary costs. The court should avoid detailed issue-by-issue accounting and should consider whether costs overlap with issues on which the successful party achieved substantial success. In exceptional cases, serious litigation misconduct may justify a substantial reduction, even where the claimant obtained substantive relief. The court must also consider the available forms of costs order and whether an interim payment is just and proportionate.

The claimants had previously obtained substantive relief against the first defendant and an acknowledgment and payment from the third defendant, while their claim against the second defendant had been dismissed by consent with an indemnity costs order. This judgment concerned only the appropriate costs orders between the claimants and the first and third defendants, and an application for a payment on account.

The claimants sought 70 per cent of their costs jointly and severally from the first and third defendants. The defendants sought no order as to costs. The court therefore had to determine the appropriate costs consequences of the parties’ success, failed issues, conduct of the litigation and the third defendant’s period of resistance before adopting a neutral position.

1. The court held that the general rule under Civil Procedure Rules 1998, r 44.3(2), was the starting point, but that a different order was required having regard to all the circumstances, including conduct, partial success and settlement offers under r 44.3(4) and r 44.3(5). The court should not undertake a lengthy allocation of every allegation and issue. An adjustment requires conduct-based fault, such as unreasonableness, an improper manner of conduct or exaggeration.

2. Applying A L Barnes Ltd v Time Talk (UK) Ltd [2003] EWCA Civ 402, the claimants were the successful party as against the first defendant because they had established an entitlement to recover money. That conclusion did not prevent a substantial reduction for the manner in which the litigation had been conducted.

3. The claim against the second defendant, the unnecessary fraud allegations, the failed contractual case, the excessive breadth of the fiduciary-duty case and serious deficiencies in disclosure and witness verification justified a cumulative reduction. The costs attributable to the third defendant’s claim and costs already covered by other orders were also to be excluded. The appropriate result was that the first defendant should pay 5 per cent of the claimants’ own relevant costs, assessed on the standard basis.

4. The court declined to order an interim payment. It could not confidently predict the sum ultimately payable after assessment, the first defendant intended to seek permission to appeal, and a payment would have been of limited significance to the claimants while creating a risk of overpayment and recovery difficulties.

5. As against the third defendant, the court applied the fact-sensitive approach in Sinclair Investments (UK) v Versailles Trade Finance Ltd [2011] EWHC Civ 347. The third defendant had reasonably retained the money to abide the event and, given the claim as originally advanced and the professional advice received, it was not obvious, nor should it have been obvious, that the transaction was probably improper. The order was therefore no order as to costs.

not stated in the judgment.