Cranstoun & Anor v Notta

In determining costs after a successful claim, the court should identify the winner, consider whether the winner lost a distinct issue, and then decide whether the circumstances justify a different costs order. Where valuation is transferred from a contractual mechanism to the court, the ordinary procedural and costs powers of the court apply unless expressly restricted. Indemnity costs may be awarded from the point at which conduct, disclosure failures and rejected settlement opportunities take the case outside the norm. A costs budget may be revised where a significant development warrants revision, but the application should be made promptly.

The claimants and defendant were parties to a dental costs sharing agreement. Following the main judgment, which determined the valuation date and valued the defendant’s practice assets at £96,000, the court considered the consequential form of order, costs, revision of the claimants’ costs budget and an interim payment.

The central issues were which party had won, whether any issue justified depriving the successful claimants of costs, whether costs should be assessed on the indemnity basis, whether the costs budget should be revised, and whether an interim payment should be ordered.

1. Disposition and costs. The claimants were the winners. The court adopted the three questions identified in Hospira UK Ltd v Novartis AG [2013] EWHC 886: who had won, whether the winner had lost a suitably circumscribed issue, and whether all the circumstances justified a different order. None of the defendant’s arguments justified depriving the claimants of their costs.
2. Effect of submitting valuation to the court. The parties’ agreement to replace the contractual valuation mechanism with a court valuation carried with it the court’s ordinary procedural powers, including powers concerning directions, disclosure, disputes and costs. Any unusual restriction on those powers required specific and express agreement. The defendant’s alleged term that each party would bear its own valuation costs was neither found in the agreement nor consistent with the parties’ subsequent conduct.
3. Indemnity costs. The early conduct did not quite justify indemnity costs because the dispute involved other issues and settlement attempts. From 1 May 2020, however, the defendant’s failure to provide reliable and current financial information, together with the claimants’ serious settlement offers and the result achieved, took the case outside the norm. Costs from that date were therefore to be assessed on the indemnity basis.
4. Costs budget. Under CPR 3.15A, a revision should be sought promptly where a significant development warrants it. The additional closing-submissions day and form-of-order hearing were significant developments. Other requested variations were refused as late or insufficiently significant. The budget was revised upwards by £13,807, with earlier budgeted items for PTR and mediation removed.
5. Interim payment and set-off. The defendant was ordered to pay £127,000 on account of costs within 21 days. The £96,000 payable to acquire the defendant’s practice interests was set off against that sum. Permission to appeal was refused because the proposed grounds had no realistic prospect of success.

The present judgment followed the main judgment in the same proceedings, [2020] EWHC 3488, which determined the valuation date and valued the defendant’s practice assets at £96,000. This judgment dealt with the consequential order and costs.