Scales v Motor Insurers' Bureau

Issue-based costs orders are not justified merely because the successful party lost on some issues. They may be appropriate where a discrete issue caused additional costs, particularly if it was raised unreasonably, but the court must stand back and assess the overall justice of the case.

Where a claimant beats a Part 36 offer, the prescribed consequences should be ordered unless doing so would be unjust. Foreign-law penalty interest does not ordinarily displace or duplicate those consequences where it serves a different purpose. A reasonable interim payment on account of costs should generally be ordered when detailed assessment is directed, using a broad and practical estimate.

The claimant succeeded in recovering compensation and penalty interest from the defendant in proceedings arising from an accident in Spain. The quantum judgment awarded £539,096.83. The parties agreed most consequential matters but disputed whether costs should be apportioned by issue, whether the claimant was entitled to the consequences of beating his Part 36 offer, and the appropriate interim payment on account of costs.

The court considered the interaction between Civil Procedure Rules 1998 rules 44.2 and 36.17, the effect of Spanish penalty interest, and the proper approach to estimating an interim costs payment.

1. Issue-based costs. The claimant had lost on care costs and future costs, but had succeeded on an alternative and less ambitious Spanish-law argument which secured the maximum award for permanent incapacity. The care evidence also assisted the assessment of third-party care, case management, services, continuing symptoms and temporary incapacity. Those issues were therefore not sufficiently discrete, and the evidence would have been necessary in any event. Applying CPR 44.2, it was just that the claimant recover his costs in full for both periods.
2. Part 36. The claimant had beaten his offer of £500,000. Under CPR 36.17(4), indemnity costs, interest on costs and the additional award were required unless unjust. Spanish penalty interest compensated a different default from failure to accept a Part 36 offer. It therefore did not make the English consequences unjust. The claimant was entitled to the prescribed additional award of £51,950 and indemnity costs from 1 April 2020.
3. Interest on costs. The court had a broad discretion, subject to the statutory maximum. An award of 6% above base rate was appropriate. McPhilemy v Times Newspapers (No 2) did not establish a general norm requiring 4%.
4. Interim payment. Where detailed assessment is ordered, a reasonable payment on account should ordinarily be made under CPR 44.2(8). The assessment is rough and ready, but the court must avoid awarding more than the likely assessed costs. Taking account of the approved budget, additional expert evidence, Part 36 consequences and sums already paid, the appropriate interim payment was £175,000.