MANUEL MATHIEU v TONY MARTIN HINDS & Anor (No 2: Costs)

Costs are governed by the broad discretion in CPR 44.2. The unsuccessful party normally pays the successful party’s costs, but that rule may be adjusted where a successful claimant loses on a discrete issue that caused material additional costs. The court should consider whether the issue was reasonably raised and conducted, the extent of the additional costs, partial success, conduct, exaggeration and admissible settlement offers. A broad-brush percentage reduction is generally preferable to a detailed issue-based order where practicable. Failure to beat a non-Part 36 offer does not trigger the Part 36 regime, but may materially affect the court’s general discretion. Costs budgets may be exceeded only for good reason, and an interim payment on account should reflect the realistic recoverability of the costs claimed.

The claimant brought a personal injury claim arising from a serious road traffic accident. Liability had been admitted and, following a quantum trial, the claimant recovered £3,178,741.64, including provisional damages for epilepsy but not dementia.

The parties disputed costs. The defendant argued that the claimant had achieved only partial success, had advanced an exaggerated claim, had failed on the dementia issue and had rejected realistic offers. The claimant sought his costs and an interim payment on account. The court had to determine the appropriate costs order for two periods, divided at 1 February 2022, and the amount of the interim payment.

1. Costs up to 31 January 2022. The claimant was the successful party in substance. The general rule in CPR 44.2(2)(a) therefore applied, subject to the court’s discretion under CPR 44.2(2)(b).
2. The dementia claim was a discrete and distinct issue. It was complex, significant, separately contested and generated material additional costs. Although reasonably raised, aspects of its conduct were unreasonable, including the unrealistic valuation of the provisional damages claims and the inclusion and later withdrawal of an immediate damages claim. Applying CPR 44.2(4)(a) and (b), and CPR 44.2(5)(a) and (c), the claimant should bear part of the costs consequences. A broad-brush reduction of 15% was appropriate.
3. The claimant’s recovery of less than 10% of the pleaded claim and the unrealistic presentation of the earnings claim did not justify a further reduction for the earlier period. Those matters were more appropriately considered in the later period.
4. Costs after 1 February 2022. The claimant remained the successful party in substance, but his failure to beat two Calderbank offers was relevant under CPR 44.2(4)(c) and the general conduct discretion. He had beaten the defendant’s Part 36 offer, however narrowly, so CPR 36.17(2) had no adverse application. The later offers nevertheless supported a further reduction under CPR 44.2. The appropriate reduction was 60%, rather than an order requiring the claimant to pay the defendant’s costs or no order for costs.
5. An interim payment on account was appropriate under CPR 44.2(8). It was calculated by applying the relevant reductions to incurred and budgeted costs, excluding costs of the pending budget-variation application, allowing for interlocutory costs and deducting £11,500. The total was £392,000.
6. The defendant was ordered to pay 85% of the claimant’s costs up to 31 January 2022 and 40% thereafter, subject to detailed assessment.