Julie Anne Morton v Simon Nigel Morton & Anor

Where litigation produces mixed success, costs should be assessed by identifying the party who was predominantly successful overall, while separately recognising materially distinct phases and issues. The court may use a broad assessment under CPR 44.2 rather than attempt an impracticably precise allocation.

Part 36 applies its prescribed monetary comparison by reference to nominal sums. The court may nevertheless withhold or limit the enhanced consequences where, considering all the circumstances, the offer was tactically framed, impossible or unrealistic to accept within the relevant period, or made at a late stage primarily to obtain costs advantages. Successive Part 36 offers may each be considered, but relief must not produce injustice.

The judgment concerned costs following proceedings about the dissolution of a family partnership, the ownership and valuation of partnership assets, proprietary estoppel, post-dissolution accounts and an option to purchase a partnership interest.

In an earlier judgment, Julie Morton substantially succeeded on ownership issues, while Simon and Alison Morton succeeded on proprietary estoppel. In a later judgment, Julie succeeded on statutory interest under section 42 of the Partnership Act 1890. The Court of Appeal reversed that conclusion and remitted the costs issues, holding that statutory interest was excluded if the option was exercised: [2023] EWCA Civ 700.

The court had to determine the successful party, the effect of Calderbank and Part 36 offers, whether the Part 36 monetary comparison was satisfied, and whether the prescribed consequences would be unjust.

1. Overall costs. Julie was the successful party under CPR 44.2(2)(a), viewed across the litigation. The first phase was the more important phase and Julie had predominantly succeeded in it, although Simon and Alison had succeeded on proprietary estoppel and, after appeal, on statutory interest. The second phase was sufficiently distinct, but the fair result was 50% of Julie’s costs for the period up to and including 26 April 2022, with no order as to costs thereafter, subject to Part 36.
2. Julie’s Part 36 offer. The operative judgment was the earlier judgment and order as varied by the Court of Appeal, excluding the Court of Appeal’s separate costs order. The monetary comparison under CPR 36.17(2) was nominal: £2,053,278 was greater than the £2,000,000 offer. Different payment dates and the separate appeal costs did not alter that comparison.
3. Unjustness. The court could consider subsequent negotiations and information when deciding whether relief under CPR 36.17(4) would be unjust. Julie’s original Part 36 offer was unrealistic because Simon and Alison had no realistic prospect of raising £2,000,000 within the prescribed period. Her later Calderbank offer, which allowed staged payment, transformed the position. Relief was therefore unjust for the period from 15 March to 13 June 2021 and after 30 August 2022, but not for the intervening period.
4. Extent of relief. The court could withhold particular Part 36 remedies, but had no jurisdiction under rule 36.17(4)(b) to substitute a different costs period for the period specified by the rule. Julie therefore received 1% interest on £2,053,278 from 14 June 2021 to 30 August 2022 and the additional £75,000 under rule 36.17(4)(d), but no indemnity costs or interest on costs under rules 36.17(4)(b) and (c).
5. Simon and Alison’s offer. Their claimant’s Part 36 offer was valid. Successive offers were permissible, but it would be unjust to impose Part 36 consequences because the offer was made very late, covered the entire proceedings despite mixed success, and bore the hallmarks of a tactical offer rather than a genuine settlement attempt.
6. Costs were subject to detailed assessment on the standard basis. Simon and Alison were ordered to make an interim payment of £100,000. There was otherwise no order as to costs.

• Court of Appeal: The statutory-interest ruling was reversed and the costs issues were remitted to the High Court: [2023] EWCA Civ 700.
• High Court: The remitted costs issues were determined by the present judgment.