Morshead Mansions Ltd v Mactra Properties Ltd

Costs following a successful appeal on the interpretation of a lease are determined afresh where the lower court’s costs order depended on a different result. The court should identify the real winner, consider partial success, and assess whether any issue materially increased the costs. There is no arithmetical formula for apportionment. A fair percentage reduction may reflect limited success without applying a year-by-year division, particularly where an unsuccessful issue added little or nothing to the costs. Conduct relevant to costs must relate to the application or hearing for which costs are sought. The ordinary rule remains that the successful party should recover its costs, subject to the court’s discretion.

Morshead Mansions Limited appealed against the costs order made after an application by Mactra Properties Limited for summary judgment concerning certified accounts required by the lease. The substantive appeal produced different conclusions from those reached by the judge below. Summary judgment was obtained for some years but refused for others, including because one claim had been brought prematurely and another raised uncertainty about the items to be included. The court therefore had to determine the costs of the summary judgment application and the appeal afresh. The central issues were which party had substantially succeeded, whether the unsuccessful years should affect the award, and whether either party’s conduct justified a different order.

1. The costs order made below was discharged because it had been based on a different interpretation of the lease and a different outcome. The court was required to exercise its own discretion in relation to the costs below and on appeal.

2. Mactra was the successful party in substance. It obtained summary judgment for 2004 to 2006 and defeated Morshead’s central contention that no accounts were required because full accounts could not be prepared. The failure concerning 2007 added no material cost because the claim had merely been brought too soon.

3. The refusal of summary judgment for 2003 did not justify dividing the costs arithmetically by reference to the number of years. The issue concerning 2003 raised no separate evidence or argument and did not materially increase the costs. Nevertheless, Morshead’s success on that issue should be reflected in a reduction.

4. The appropriate reduction was 10%. The figure was an evaluative exercise intended to achieve fairness. No scientific or uniquely correct calculation was possible. The court rejected both making no order as to costs and awarding costs by fixed fractions.

5. Only conduct connected with the summary judgment application and appeal was relevant because those were the costs being sought. Mactra’s conduct did not justify a reduction. Morshead Mansions Limited was ordered to pay 90% of Mactra’s costs of the application and appeal, including the costs of the costs hearing, subject to detailed assessment on the standard basis if not agreed.

• High Court (Chancery Division): The substantive appeal produced a different interpretation of the lease and different results for particular years. The costs order below was discharged, and costs were重新 determined in [2013] EWHC 801 (Ch).