Dau Chi Chong v Funafloat Ltd (t/a College Cruisers) & Anor

The usual rule is that costs follow the event, but the court retains a broad discretion to achieve justice. On an appeal concerning costs, the central question is causation: who caused the costs to be incurred? It is not enough that one defendant introduced another into the litigation through contribution proceedings. Where a claimant independently chooses to join the other defendant and then actively pursues the claim against that defendant, the claimant ordinarily causes the costs of the main action and should bear them if the claim fails. A defendant should generally bear only the costs of contribution proceedings which it caused, absent unreasonable conduct or another proper reason to depart from the usual rule.

The claimant suffered serious injury when a lift bridge fell on him while he was travelling on a narrow boat hired from Funafloat Ltd. He initially issued proceedings against Funafloat and the British Waterways Board, but pursued the claim only against Funafloat. After Funafloat issued Part 20 contribution proceedings against the Board, the claimant later joined the Board to the main action and pursued substantially the same failure-to-warn case against both defendants.

After a nine-day trial, HHJ Gregory dismissed the claim and the Part 20 proceedings. He ordered Funafloat to pay the Board’s costs of the main action, subject to an indemnity from the claimant, because Funafloat’s Part 20 claim had caused the Board to become involved. Funafloat appealed. The central issue was whether the costs should follow the event or instead be allocated by reference to the party responsible for causing them.

1. Appeal allowed. The Court of Appeal held that HHJ Gregory had exceeded the bounds of his legitimate discretion in ordering Funafloat to pay the Board’s costs of the main action.
2. The usual rule is that costs follow the event, meaning that the unsuccessful party pays. Although the court has a broad discretion to do justice, an appellant faces a high hurdle in challenging a costs order. The discretion must nevertheless be exercised judicially.
3. The relevant question was not simply who introduced the Board into the proceedings, but who caused the costs to be incurred. Funafloat’s Part 20 claim may have prompted the claimant to reconsider his position, but the claimant was not obliged to join the Board. He made a calculated decision to do so and then pursued a substantial positive case against the Board through disclosure applications, evidence, cross-examination and submissions.
4. Both defendants succeeded against the claimant and neither had acted unreasonably. The claimant therefore had to pay both defendants’ costs of the main action. Funafloat had to bear the costs of the Part 20 proceedings, which it had caused. The court recognised that detailed assessment might be required and expressed the view that the limited available fund should, if possible, be distributed fairly between the defendants.

Lady Justice Hallett gave the leading judgment. Lord Justice Rimer and Lord Justice Laws agreed with her reasons and with the order allowing the appeal.

• Court of Appeal (Civil Division): Appeal allowed. The order requiring Funafloat to pay the Board’s costs of the main action was replaced by an order that the claimant pay both defendants’ costs of that action; Funafloat remained liable for the Part 20 costs.
• High Court of Justice, Queen’s Bench Division, Coventry District Registry: After trial, HHJ Gregory dismissed the claimant’s claim and Funafloat’s Part 20 claim, but ordered Funafloat to pay the Board’s costs of the action subject to an indemnity from the claimant.