Robin Steve Harry Holden v David Andrew Holden & Anor

In split trials, costs should generally be determined when issues are resolved rather than deferred until the end of the litigation. The court retains a broad discretion and must consider the parties’ relative success and all relevant circumstances. Part 36 offers require compliance with the applicable rules; offers that fail those requirements may instead be admissible Calderbank offers. In partnership dissolution proceedings, an erstwhile partner whose rights may be affected will ordinarily remain a necessary party despite an assignment or indemnity. A settlement agreement will not release liability for future costs unless that intention is expressed clearly. Bullock orders are not confined to cases where the claimant is uncertain which defendant is at fault.

The judgment concerned costs following a trial of preliminary liability issues in litigation about the dissolution of a farming partnership between three brothers. Robin succeeded on the governing-terms issue, while David succeeded on the reopening-accounts issue. Nicholas, who had sold his partnership interest to David and sought to remain neutral, claimed his costs as a formally joined defendant.

The court considered whether costs should be deferred, whether David’s offers were Part 36 offers, which party was successful, whether Nicholas was a necessary party, whether his settlement agreement with David barred a costs order, and whether a Bullock order was appropriate.

1. Costs at the preliminary stage. The court should ordinarily determine costs as issues arise and are resolved. Deferral remains discretionary, but a Part 36 offer may make deferral appropriate because its prescribed costs consequences depend on the final outcome. The offers in issue were not Part 36 offers because they were made by a defendant on a claimant form and included payment terms inconsistent with CPR rule 36.6. They were admissible Calderbank offers under CPR rule 44.2(4)(c), but did not justify deferring costs.
2. Successful party and proportion. Robin was the successful party for the purposes of the general rule because the governing-terms issue was the principal issue and was decided in his favour. David’s success on the reopening-accounts issue required substantial allowance. David was therefore ordered to pay 50% of Robin’s costs of the preliminary trial.
3. Necessary party. Applying the partnership authorities, an assignor or erstwhile partner will ordinarily remain a necessary party to dissolution and accounting proceedings where the litigation may affect rights and obligations between the partners. An indemnity or settlement agreement does not remove that necessity. Nicholas was properly joined and was to remain a party, although the claim against him could be stayed subject to permission to lift the stay.
4. Nicholas’s costs. The settlement agreement did not clearly release future liability for a court-ordered costs payment arising from litigation between Robin and David. Its wording was ambiguous in that context. Nicholas’s costs of the preliminary trial were allocated equally between Robin and David, implemented by requiring Robin to pay Nicholas and David to reimburse Robin for 50%.
5. Bullock order. The court’s broad discretion under CPR rule 44 permitted the proposed indirect allocation of Nicholas’s costs. Whitehead v Searle did not establish a binding limitation confining Bullock or Sanderson orders to cases involving uncertainty as to fault.
6. Consequentials hearing. Robin was ordered to pay Nicholas’s costs of the consequentials hearing. David was ordered to pay Robin 25% of Robin’s costs of that hearing and 62.5% of the amount Robin was required to pay Nicholas. All costs were to be assessed on the standard basis.

First-instance consequentials judgment following the preliminary-issues trial. The earlier judgment was reported as [2023] EWHC 3292 (Ch).