Purrunsing v A'Court & Co (a firm) & Anor

A successful party is not automatically subject to an issue-based reduction in costs merely because some pleaded issues were abandoned, unresolved or unsuccessful. The court must assess whether those issues materially affected the costs or outcome.

For a Part 36 money offer, the comparison with the judgment must remove interest accruing after the offer’s acceptance period. Otherwise the parties are not being compared on like-for-like monetary terms.

Indemnity costs require conduct taking the case outside the norm, usually involving an aggravating factor or unreasonable conduct to a high degree. Failure to accept a settlement offer is not enough without more.

The claimant had succeeded in the substantive proceedings against both defendants, who were ordered to bear equal parts of the loss. The court then considered the remaining costs issues.

The issues were whether the claimant’s costs against the first defendant should be reduced because certain claims had been abandoned or left unresolved; whether the claimant had bettered a Part 36 offer; whether indemnity costs were justified by the defendants’ statutory defences and settlement conduct; and how costs should be allocated between the defendants, including the contribution proceedings.

1. Issue-based costs. The starting point under CPR r.44.2(2)(a) was the claimant’s success. Although the court could depart from that approach under CPR r.44.2(2)(b), the claimant had recovered the whole loss caused by the first defendant’s breach of trust. The abandoned or unresolved issues had not materially increased costs, affected the outcome or materially affected settlement valuation. No reduction was therefore justified. The approach was consistent with HLB Kidsons v Lloyds Underwriters [2007] EWHC 699.
2. Part 36. Under CPR r.36.5(4), the offer included interest until expiry of the relevant acceptance period. In deciding whether the judgment was at least as advantageous under CPR r.36.17, post-expiry interest had to be excluded from the comparison. The claimant had therefore not bettered the offer and was not entitled to enhanced costs.
3. The general Part 36 consequences normally followed where an offer was bettered, subject to injustice. The relevant focus was principally the terms of the offer, the information available and the circumstances surrounding the offer, rather than general litigation conduct.
4. Indemnity costs. Pursuing an unsuccessful statutory defence under s.61 of the Trustees Act 1925 did not, without more, justify indemnity costs. The defences had not been unarguable, and the result depended partly on oral evidence. Truly exceptional circumstances or aggravating factors were required. The same threshold applied to unsuccessful settlement positions; the defendants’ failure to settle did not take the case outside the norm.
5. The first defendant failed to show that a higher contribution offer would have avoided trial. The contribution-costs application also failed because the relevant offer did not address costs in a form capable of producing the proposed consequence.
6. The claimant’s costs were payable on the standard basis if not agreed. Each defendant remained responsible for the claimant’s costs as ordered after the substantive judgment. There was no order as to the contribution proceedings’ costs. Costs of the post-judgment hearing were divided substantially on an issue-based basis, with set-off directions.

The judgment concerned the post-judgment determination of costs following the substantive judgment, [2016] EWHC 789 (Ch). No appellate decision is stated.