General Motors UK Ltd v The Manchester Ship Canal Company Ltd

In exercising its discretion as to costs, the court may make an issue-based order where a distinct issue has materially increased the costs and the successful party lost that issue. The court must consider whether a proportionate or time-limited order is practicable.

Costs in relief-from-forfeiture proceedings ordinarily fall on the applicant on the indemnity basis. An exception may arise where the landlord’s opposition to relief was unreasonable or unnecessary. The assessment depends on the history and conduct of the particular case.

This was a further judgment following the determination of claims concerning the termination of a licence permitting discharge into the Manchester Ship Canal. The claimant obtained relief from forfeiture but failed on its claim that the licence created a proprietary interest or easement and on a claim under the 1885 Act. The defendant’s counterclaims were dismissed.

The parties agreed several costs matters but disputed the appropriate orders for the 1885 Act claim, the relief-from-forfeiture proceedings, the counterclaims, reserved costs and interim payment. The central issues were whether costs should be apportioned by issue and whether the defendant’s opposition to relief had been unreasonable or unnecessary.

1. The court made an issue-based costs order. The claim under the 1885 Act was introduced late, was distinct from the relief claim and generated substantial additional work, including hydrological expert evidence. The claimant therefore had to pay the defendant’s costs of that issue on the standard basis.
2. Under CPR 44.2, the court has a broad discretion, taking account of the circumstances, the parties’ conduct, the reasonableness of pursuing issues and whether a distinct issue order is practicable. The court should consider proportionate or time-limited alternatives before making an order by reference to a particular issue.
3. The general rule in relief-from-forfeiture cases, stated in Patel v K & J Restaurants [2010] EWCA Civ 1211 and Bland v Ingrams Estates Ltd (No 2) [2001] EWCA Civ 1088, is that the applicant pays the landlord’s costs of the forfeiture and relief proceedings on the indemnity basis. The relevant exception concerns unreasonable or unnecessary opposition.
4. The defendant’s opposition was not unreasonable or unnecessary throughout. The proprietary-interest case failed, relief was sought only after substantial delay, and compensation for wasted management time was not clearly offered until the opening submissions. Those matters distinguished the case from Maybeech. The claimant was ordered to pay the costs of forfeiture and the relief application up to 26 August 2016 on the indemnity basis, with no order as to costs thereafter.
5. There was no order for costs on the trespass counterclaim. The spillway counterclaim was dismissed, but the claimant recovered its costs of that issue on the standard basis. The parties’ agreed stay was continued, and no interim payment was ordered because the ultimate costs liability remained uncertain pending appeal.

This was a further first-instance judgment on costs following the court’s earlier judgment. Permission to appeal and cross-appeal had been granted on specified substantive issues, but no appellate decision is stated in this judgment.