Bal & Ors v Singh & Ors (Costs)

Where substantive proceedings are compromised, there is no default rule that costs should be subject to no order. The court must assess all the circumstances, including the parties’ relative success, the underlying issues, conduct and settlement terms. The same approach applies to a counterclaim. A no-order costs order may be appropriate where the compromise does not reveal who succeeded, but it is inappropriate where the likely outcome and substantial success are sufficiently clear. The court may make proportionate and issue-sensitive costs orders, including partial recovery and set-off between claim and counterclaim.

The claimant brought representative and personal proceedings concerning the governance and administration of a charitable Sikh gurdwara, including alleged interference, intimidation and control of its facilities and bank account. Certain defendants brought a counterclaim challenging the validity of sub-committee resolutions and the funding of the proceedings.

The substantive claim and counterclaim were compromised by a Tomlin Order without admissions. The court had to determine the appropriate costs consequences, including the effect of the parties’ differing degrees of success and the relationship between the claim and counterclaim.

1. Costs after settlement. The court applied R(M) v London Borough of Croydon [2012] 1 WLR 2607. Under CPR 44.2, the general rule that the unsuccessful party pays the successful party remains relevant, but the court must consider all the circumstances, including conduct, the extent of success and settlement offers. A compromise does not create a default no-order outcome.
2. Where settlement makes success uncertain, a no-order order may be just. Where the underlying issues and likely outcome show that one party achieved significant success, the court may award costs despite the absence of a judgment on the merits. These principles apply equally to a counterclaim and become more difficult to apply where several parties, claims and agreed outcomes are involved.
3. The claimant had achieved significant success in securing arrangements which broadly protected the governance and administration of the gurdwara for the remainder of the executive committee’s term. The claimant had, however, failed entirely on the attempt to exclude D1 and had been subject to fair procedural and conduct criticisms. A no-order order would therefore fail to reflect the justice of the case. The claimant was awarded 50% of the costs of the claim.
4. The defendants’ counterclaim succeeded on the challenge to the sub-committees but failed concerning the funding of the claim. The counterclaimants were awarded 50% of their counterclaim costs, set off against the claimant’s costs. The resulting liability was joint and several: D1 for the whole net sum, D3 for 60% and D8 for 20%, reflecting their differing roles and the relief obtained against them.
5. No further costs order was made concerning D2. D4–D6 were treated as successful in defeating the claim against them. The court made the order after standing back and considering whether the practical costs of multiple orders were proportionate.