HFI Farnborough LLP & Ors v Park Garage Group Plc

Costs ordinarily follow the successful party, but the court may make an issue-based order where discrete issues generated substantial additional costs and the successful party achieved no meaningful success on them. The court should have regard to the steer against issue-based orders in the Civil Procedure Rules, but may still make a proportionate percentage order where a precise apportionment is impracticable. An interim payment on account of costs may be assessed by applying a reasonable percentage to the recoverable estimated costs. Permission to appeal may be granted on specified issues where the Court of Appeal might reasonably take a different view.

The judgment concerned costs and permission to appeal following the court’s substantive judgment, formally handed down on 13 December 2012. The defendant had succeeded on the principal construction and rectification issues, while the claimants had achieved a more favourable result on valuation and mesne profits. The parties disputed whether the defendant should recover the costs of those issues, the amount of an interim payment on account of costs, and the scope of permission to appeal.

1. Costs. The defendant was the successful party, so the starting point was that the claimants should pay its costs. However, the valuation and mesne profits issues were discrete, generated significant additional evidence and expense, and were unnecessary to the defence of the main construction and rectification issues.
2. The defendant had not succeeded on those issues. Their result was, at best, a score draw and probably favoured the claimants. It was therefore fair to exclude the defendant’s costs of its expert, Mr David Hunter, and to make a proportionate order for the remaining costs.
3. Having regard to the steer in CPR 44(3)(7) against issue-based costs orders, the court made an order under CPR 44(3)(6)(a): there was no order for the expert’s costs; the claimants were to pay the remaining disbursements; and they were to pay 80% of the defendant’s solicitors’ and counsel’s fees, all costs to be assessed if not agreed on the standard basis.
4. Interim payment. After deducting the expert’s costs and applying the 20% reduction, the recoverable estimated costs were £306,872.19. An interim payment of £185,000 was ordered, representing approximately 60% of that figure.
5. Permission to appeal. Permission was granted to the claimants on the construction and rectification issues, including an issue not decided in the substantive judgment. Permission was also granted to the defendant to appeal or cross-appeal on costs, but not on the amount of the interim payment. No permission was sought on valuation or mesne profits.

The judgment followed the High Court’s substantive judgment in the same action, formally handed down on 13 December 2012. Permission to appeal was granted to the claimants on construction and rectification, and to the defendant on costs.