Wigan Borough Council v Scullindale Global Limited & Ors

When exercising the costs discretion, the court must consider the litigation as a whole, including partial success, conduct and admissible settlement offers. A proportionate reduction may reflect issues on which the successful party failed, but an offer that should reasonably have been accepted may justify removing that reduction, including in respect of costs incurred before the offer was rejected. Indemnity costs require conduct outside the norm and unreasonable conduct to a high degree. After trial, a party cannot ordinarily vary its approved costs budget retrospectively under CPR 3.15A; instead, the trial judge should record any good reason for departure for the costs judge. An approved budget may support an interim payment on account, but no fixed percentage is prescribed.

Following a ten-day trial concerning the termination of a long lease of Haigh Hall, the court had found principally for Wigan Borough Council. The lease had been validly terminated, Scullindale had to give vacant possession, and Wigan was required to pay approximately £4.922 million under the lease. Claims for mesne profits, double value, damages, and claims against the guarantors had failed.

The judgment determined consequential matters, including possession, payment, variation of the approved costs budget, the proportion of costs recoverable, the effect of a without prejudice save as to costs offer, indemnity costs, and payment on account.

1. Consequential orders. Scullindale was directed to give vacant possession of Haigh Hall, together with the fixtures and fittings, by 1 p.m. on 18 June 2021. Wigan was to transfer the termination payment during banking hours on that day. Wigan was entitled to close the leasehold title, subject to paying Scullindale’s reasonable costs of answering Land Registry requisitions.
2. Costs budgeting. A retrospective application to vary an approved costs budget after judgment was inappropriate under CPR 3.15A. The court adopted the reasoning in Elvanite Full Circle Ltd v Amec Earth & Environmental (UK) Ltd and referred to Persimmon Homes Limited v Osborne Clarke LLP. The proper course was to record specific good reasons for departure, leaving the costs judge to exercise the discretion under CPR 3.18 (b). The recorded reasons covered late disclosure, consequential expert work, a site visit, and up to three additional trial days.
3. General costs discretion. Under CPR 44.2 and CPR 44.24, the general rule that costs follow the event is subject to all the circumstances, including partial success and admissible settlement offers. Without the offer, Wigan would have recovered 80% of its costs because it had failed on significant issues, including the proposed reduction in the termination payment.
4. Settlement offer and indemnity costs. The offer was one which the defendants should have accepted, but their refusal was not unreasonable to the high degree required for indemnity costs. Applying Epsom College v Pierse Constructing Southern Ltd, costs therefore remained on the standard basis. Nevertheless, the offer justified awarding Wigan all its costs, including costs incurred before rejection, because the overall costs burden had to be assessed at the date of decision.
5. Interim payment. Under CPR 44.28, Wigan was entitled to a reasonable sum on account. Following the approach in Thomas Pink Ltd v Victoria’s Secret UK Ltd, the court ordered £270,000, representing 90% of the approved budget. That percentage was not a rule of law.
6. The offer was sufficiently clear as to fixtures and fittings. A reasonable recipient would infer from its silence that tenants’ fixtures and fittings were not required to be delivered up, and any uncertainty could have been clarified.

The judgment concerned consequential matters following the court’s reserved judgment in the same first-instance proceedings, reported at [2021] EWHC 779 (Ch). No application for permission to appeal was made.