South Tees Development Corporation & Anor v PD Teesport Limited

In exercising the costs discretion under Civil Procedure Rules 1998, r 44.2, the court must identify the overall successful party and then consider all the circumstances. The fact that the successful party failed on some issues does not, by itself, justify an issue-based order. A distinct issue causing additional costs may justify a proportionate deduction. A Calderbank offer may be considered under r 44.2(4)(c), without applying Part 36’s rigid costs consequences.

This was a consequential hearing following a six-week trial, at which judgment had been handed down on 5 February 2024. The court had to determine costs and related matters.

The claimants, supported by the third party, sought declarations that the defendant had no rights of way over relevant land. The defendant established rights of way over three significant routes, but abandoned other claims at the outset of trial. The central issue was the appropriate costs order, including the effect of the abandoned claims and a Calderbank offer made shortly before trial.

1. Successful party. The defendant was the overall successful party because it established the substantive rights of way sought in the litigation. The general rule therefore applied: the claimant and third party were to pay the defendant’s costs.
2. Issue-based costs. Under Civil Procedure Rules 1998, r 44.2, failure on some issues did not itself justify depriving the successful party of its costs. An issue-based order may be appropriate where a discrete issue caused additional costs, particularly if it was raised unreasonably. The court must stand back and assess the overall justice of the case. The guidance summarised in Pigot v Environment Agency was applied, with the additional point that the court should consider whether the issue was merely another basis for the principal claim.
3. Abandoned claims. The defendant’s abandoned claims should have been abandoned earlier and caused additional costs, principally in expert evidence and trial preparation. A broad deduction of 20% from the defendant’s recoverable costs was appropriate. The failed proprietary-estoppel claim and other unsuccessful issues did not justify a further departure.
4. Calderbank offer. The offer made on 19 September 2023 could be taken into account under r 44.2(4)(c). There was no rigid test equivalent to Part 36. The defendant substantially bettered the offer, and its rejection caused substantial further costs.
5. Order. The defendant was awarded 80% of its costs up to 21 September 2023 and 100% thereafter.

The ruling followed the court’s judgment after trial, handed down on 5 February 2024. No appellate history is stated in the judgment.