Bath Rugby Ltd v Greenwood& Ors (Costs : special considerations)

In a claim under Law of Property Act 1925, the established costs practice has survived the CPR as a flexible guideline. The court may require the claimant to indemnify defendants for costs incurred in investigating and opposing the claim, because their participation assists the court in making an effectively in rem decision. Where the defendants succeed at trial, the court may award one set of costs on the indemnity basis throughout. The usual distinction between costs incurred before and after disclosure is not rigid. The court must exercise its discretion in the circumstances of the particular case.

Permission to appeal requires a real prospect of success or another compelling reason. A document’s meaning in its factual context and its legal effect may involve mixed law and fact, and evaluative findings are rarely challengeable on appeal.

The claimant brought a claim under section 84(2) of the Law of Property Act 1925 concerning restrictive covenants. The claim was dismissed at trial on 13 October 2020. Four defendants, represented by one legal team, sought one set of costs on the indemnity basis; the claimant accepted liability for costs but argued for the standard basis.

The court also considered the claimant’s application for permission to appeal on four proposed grounds concerning construction of a 1922 conveyance, identification of land intended to benefit from the covenant, and the proposed use of an easily ascertainable test.

1. Costs. Costs remained in the court’s discretion under CPR rule 44.2(1). Although the general rule is that the unsuccessful party pays the successful party’s costs, the basis of assessment required separate consideration under CPR rule 44.3(1).
2. The established practice in section 84(2) claims is a guideline rather than a rigid rule. Its rationale is to encourage persons with potentially adverse rights to assist the court’s investigation, while protecting them from adverse costs consequences until they can make an informed decision whether to oppose the application. The practice is consistent with the CPR, subject to the development of pre-action disclosure and the modern equivalent of common-fund costs being indemnity costs.
3. The practice is not confined to a successful claimant, nor does disclosure automatically mark the end of indemnity protection. In this case, the defendants’ participation assisted the court in reaching the correct decision affecting the parties and the wider neighbourhood. Their opposition was treated as one continuous defence, despite the change in the defendants formally conducting it. One set of costs was therefore appropriate.
4. The defendants succeeded at trial. The public policy underlying section 84(2) claims justified awarding their single set of costs on the indemnity basis throughout. Indemnity costs remained subject to the requirement that costs be reasonably incurred and reasonable in amount.
5. Permission to appeal. Under CPR rule 52.6, permission required a real prospect of success or another compelling reason. The first two grounds concerned construction of the 1922 conveyance in its factual context and involved mixed law and fact. The court’s evaluation of primary facts and the legal effect of the document disclosed no real prospect of success. The third and fourth grounds were also unpromising, and the one-off nature of the conveyance supplied no compelling reason for an appeal. Permission was refused, but time to file an appellant’s notice was extended to 4 pm on 17 November 2020.

The claim had been dismissed at trial by the same court on 13 October 2020. The present judgment determined consequential matters. Permission to appeal was refused, subject to an extension of time for filing an appellant’s notice until 4 pm on 17 November 2020.