The Co-Operative Bank Plc v Phillips

Where parties succeed on different issues after discontinuance, costs should principally reflect the relative importance and outcome of those issues. The court may make a proportionate costs order where one issue occupied substantially more hearing and preparation time than the others. A payment on account should reflect the likely recoverable costs, while allowing for sums payable by the receiving party and any uncertainty in assessment. Permission to appeal is refused where the proposed grounds do not have a real prospect of success.

Following the earlier judgment handed down on 21 August 2014, the court determined consequential matters arising from the Bank’s discontinuance of its claim on 18 June 2014. The issues included the parties’ costs before judgment, a payment on account, permission to appeal against the earlier decisions, and costs of the consequential matters.

At the earlier hearings, the Bank succeeded on whether its possession proceedings had an improper purpose or constituted an abuse of process. Mr Phillips succeeded on whether the Bank could add certain costs to the security and set off its costs liability against sums due to it.

1. The dominant consideration for costs incurred after discontinuance and before judgment was the parties’ degree of success and failure on the three principal issues. The improper-purpose and abuse-of-process issue occupied substantially more than half of the hearing time and was likely to have generated substantially more than half of the costs.
2. The appropriate order was therefore that Mr Phillips pay 20% of the Bank’s costs from discontinuance to judgment, assessed on the standard basis if not agreed. The Bank was to pay Mr Phillips’s costs of the claim up to discontinuance, also on the standard basis. The court assumed, without deciding in the absence of contrary argument, that the two sets of costs could be set off.
3. A payment on account of £25,000 inclusive of VAT was appropriate. The court took account of Mr Phillips’s statement of costs, the Bank’s detailed challenge, and the Bank’s entitlement to 20% of its costs for the period after discontinuance.
4. Permission to appeal was refused to both parties. Mr Phillips’s proposed appeal concerned the proper purpose and abuse-of-process findings. The Bank’s proposed appeal concerned the finding that its costs were unreasonably incurred because the proceedings were a waste of its time and expense. Neither application had a real prospect of success.
5. Each party was ordered to bear its own costs of the consequential matters following the earlier judgment. The parties were directed to draw up a Minute of Order, including directions concerning the Part 20 Claim.

The judgment records that an earlier judgment was handed down on 21 August 2014. The present judgment determined consequential costs and permission-to-appeal applications arising from that earlier decision. No citation for the earlier judgment is stated.