Amey LG Ltd v Cumbria County Council

In deciding costs under Civil Procedure Rules 1998, Part 44.2, the court starts with the unsuccessful party paying the successful party’s costs, but must consider all relevant circumstances, including conduct, relative success and admissible offers. Proportionality under Part 44.3 is principally a matter for costs assessment and costs management; it is not itself a factor governing the making of a proportionate costs order under Part 44.2. Where claims and counterclaims overlap, the trial judge may make an informed broad-brush percentage order without detailed issue-by-issue costs evidence. A payment on account should represent a reasonable estimate of likely recovery, allowing for an appropriate margin of error. Interest on pre-judgment costs remains discretionary and may exceed base rate plus 1% where the evidence establishes a higher compensatory rate.

This was a costs judgment following a substantial claim and counterclaim arising from a seven-year highways maintenance contract. The substantive judgment, [2016] EWHC 2856 (TCC), made Amey the overall winner, although it recovered substantially less than claimed and Cumbria succeeded on parts of its counterclaim.

The court considered the appropriate costs order, the amount payable on account, and interest on costs incurred before judgment. The central issues were how to weigh relative success, conduct and admissible offers; whether proportionality should influence the percentage costs order; and how the court should estimate the interim payment.

1. Costs order. Applying Civil Procedure Rules 1998, Part 44.2, the judge treated Amey as the overall successful party because it obtained a substantial net judgment and defeated the principal counterclaims. The starting point was therefore an order that Cumbria pay Amey’s costs. The court nevertheless had to consider relative success, conduct and admissible settlement offers.

2. Proportionality. Proportionality, as addressed in Part 44.3, was not an express factor under Part 44.2 and should not ordinarily be used to determine whether, or in what percentage, a proportionate costs order should be made. The trial judge’s task was to assess the impact of success, conduct and offers on the case as a whole. Detailed assessment remained the stage at which proportionality of costs incurred was to be considered. Any proportionality adjustment made at the costs-order stage should be expressly identified to avoid double recovery or double jeopardy.

3. Assessment of overlapping issues. A proportionate costs order may be made on an informed broad-brush basis where claims, counterclaims and common issues overlap, even without detailed evidence allocating costs to individual issues. An issues-based order should be used only where a proportionate order is not practicable. The court made no separate order for the SAP disclosure issue, but reflected the limited criticism of Amey’s conduct in the overall order.

4. Result. Weighing the parties’ relative success and conduct, the judge ordered that Amey recover 85% of its costs. All other reserved costs orders were treated as costs in the case.

5. Payment on account and interest. The appropriate payment on account was a reasonable estimate of likely recovery, subject to a margin for error. The court ordered payment of £4,312,500. Interest on Amey’s pre-judgment costs was awarded at 2% above base, because the evidence established that rate as an appropriate compensatory measure.

The judgment concerned consequential costs following the substantive decision in [2016] EWHC 2856 (TCC). No appellate history is stated in the judgment.