Brooke Homes (Bicester) Limited v Portfolio Property Partners Limited & Ors

Where substantive proceedings are resolved and only costs remain, the court may determine costs on the available agreed or previously determined facts if that is proportionate and consistent with the Overriding Objective. Success is assessed as a matter of common sense by examining the real-life outcome, rather than by counting individual issues. A winding-up petition which achieves no substantive benefit, because the creditor ultimately receives security and payment on the timetable originally contemplated, may leave the petitioning creditor unsuccessful. The court may make a broad-brush percentage adjustment for issues on which that party succeeded. Indemnity costs require conduct or circumstances taking the case sufficiently outside the norm.

Brooke Homes was the claimant in a substantial land-development action in which the Desiman parties, who had funded and secured the P3 parties, obtained an order requiring Brooke Homes to pay their costs. After detailed assessment, the Desiman parties issued a winding-up petition based on Brooke Homes’ failure to pay.

Brooke Homes applied for a stay of enforcement and related relief. Interim orders prevented enforcement while the issues were considered. The parties ultimately agreed undertakings under which Brooke Homes would pay the Desiman debt from sums expected to be received from the P3 parties. The petition was dismissed and no further order was made on the Brooke Application. The issue before the court was the appropriate costs order for both proceedings.

1. Outcome. Brooke Homes was the successful party in relation to both the winding-up petition and the Brooke Application. The Desiman parties were ordered to pay 80% of Brooke Homes’ costs of and incidental to both proceedings on the standard basis.
2. The court applied the ordinary costs approach under CPR 44.2. Success is not a technical concept. It is a result in real life, assessed by common sense. The petition achieved no substantive result: Brooke Homes was neither wound up nor required to pay immediately, and the Desiman parties ultimately accepted security which preserved the payment arrangements originally contemplated.
3. The court was entitled to determine costs without requiring a final hearing on the merits. The parties agreed the disposal of the petition and application, accepted that disputed facts should not be determined, and invited the court to decide costs on the existing material. Requiring a full merits hearing would have been disproportionate and contrary to the Overriding Objective. This approach was consistent with the guidance in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2003] EWCA Civ 939.
4. The Desiman parties nevertheless succeeded on several subsidiary matters, including the refusal of the disclosure application, the unsuccessful application to stay detailed assessment, and issues concerning late evidence. It was impractical to calculate their precise costs contribution. A broad-brush deduction of 20% from Brooke Homes’ costs was appropriate.
5. The conduct of the Desiman parties did not justify indemnity costs. Issuing the petition was a bold step, but it did not take the case sufficiently outside the norm. The court also declined to impose further deductions for Brooke Homes’ conduct, including the late deed of undertaking.