Harris & Anor v Moat Housing Group-South Ltd

This is my ruling on costs following the judgment handed down on 20^th December 2007.

It is common ground that the successful Respondents should be paid their costs of the appeal. They are entitled to an order that the Appellants pay their costs.

The Appellants submit that they are entitled to their costs of the Respondents’ unsuccessful application for security for costs. That application was made on the morning of the hearing and was dismissed. In my judgment the Appellants are entitled to such costs as are properly attributable to resisting the application for security.

The Respondents submit that the Appellants’ solicitors – R.J.Hawksley & Co (“RJH”) - should also be ordered to pay the Respondents’ costs.

The Court’s power under section 51(3) of the Supreme Court Act 1981 to determine by whom and to what extent the costs are to be paid extends to ordering someone who is not a party to the proceedings to pay the costs: Aiden Shipping Co Ltd v Interbulk Ltd [1986] 1 AC 965. The question in every case is whether it is just for the court to exercise its jurisdiction in that way. The making of such an order is exceptional. This is not because the statute says so, but because, where a claimant is pursuing a claim for his benefit and at his own expense, there is usually no justification for making a third party pay the costs. In order for it to be just to do so there has to be some feature which takes the case outside the ordinary run of litigation before the courts.

The Respondents submit that exactly such a feature exists in the present case. The appeal is in form the appeal of Mr Harris and Ms Hartless against the refusal of Master Haworth to assess the 19^th August bill rendered by RJH, their solicitors. But in substance the appeal is for the benefit of RJH. If Master Haworth’s decision stands RJH will not receive from the Respondents the costs which are the subject of it. RJH may seek to claim that amount against the Appellants as their clients but in reality they have no hope of recovering it. The manner in which RJH chose to proceed has deprived the Appellants of the costs they would otherwise have recovered under the bill from a solvent paying party and the Appellants would have an unanswerable defence to any such claim.

RJH accepts that the facts of this appeal are unusual and that what brought the litigation to a head was an error on the part of RJH and possibly SWL. That cannot however, they submit, affect the matter. The claim pursued was the Appellants’ claim to costs. If the Respondents are right to say that an order was justified because it was their solicitors that stood to gain from it, such an order would become the norm because that is so in every case.

In my judgment on the unusual facts of this case is it is just to order that RJH should pay the Respondents’ costs of the appeal. The reality of the case is that by agreeing with SWL to leave their costs to a separate bill – contrary to the terms of the Practice Direction – RJH produced a situation in which the Appellants were unable to recover from the Respondents the costs of the separate bill which Master Howarth was later asked to assess. This meant that the appeal from Master Howarth was one brought predominantly for their benefit; or, to put it another way, they had an overriding self-interest in the prosecution of the appeal: see Alan Cormack and Another v The Excess Insurance Company Limited, Court of Appeal 16^th March 2000. Whilst RJH might seek to claim against the Appellants for the amounts the subject of the bill it seems to me that they would have the greatest difficulty, both professionally and legally, in recovering the amount of those costs whilst Master Howarth’s decision stood, given that it was their decision to split the bills that disentitled the Appellants to recover any costs in respect of order 2004/2666. In those circumstances RJH were “a real party in ….very important and critical respects”: see T.G.A. Chapman Ltd v Christopher [1988] 1 WLR 12, 22 cited with approval in Dymocks v Todd [2004] 1 WLR 2807; Myatt & Ors v National Coal Board [2007] EWCA Civ 307; and the real interest being protected was theirs: see Kylie Palmer v The Estate of Palmer Deceased [2008] EWCA Civ 46.

Accordingly the order that I propose to make is that the Appellants and RJH should pay the Respondents their costs of the appeal which I assess at £ 3,319.38, an accepted figure. The Respondents should pay to the Appellants their costs of the Respondents’ application for security which I assess at £ 787.25.