M&M Savant Ltd v Raja & Ors

This is an appeal against a decision of the Costs Officer made in detailed assessment proceedings on 23 April 2009 whereby he decided a preliminary issue about costs in favour of the defendants/respondents (“The Tenants”). That issue relates to the correct approach to be taken on the assessment of those costs under the terms of an order made by His Honour Judge Huskinson in the Central London County Court on 26 August 2008 (“the Order”), the Learned Judge having given judgment on 8 August 2008. In that judgment, the Judge resolved two claims which the claimant/appellant (“The Landlord”) had brought, firstly in Lands Tribunal proceedings on appeal from the Leasehold Valuation Tribunal (the “LVT appeal”) and secondly in County Court proceedings issued under Civil Procedure Rule 8 for dispensation from the requirements to consult set out in section 20 of the Landlord and Tenant Act 1985 (“the dispensation claim”).

The Order said this:-

“The claimant is to pay the costs of all three defendants in relation to the County Court proceedings (claim CHY06059) including the costs of the case management hearing on 31 October 2007 (which were reserved in the order made that day as recorded in a written order subsequently signed on 12 November 2007). The quantum of such costs shall be subject to a detailed assessment on the standard basis if not agreed.”

At the detailed assessment (which involved two bills in the sums of £21,317.18 and £6,044.42 respectively) the Costs Officer heard argument as a preliminary issue about the “general extent of the costs order” as set out in the Landlord’s Points of Dispute. He decided that where the Tenants had claimed costs:-

“It does seem to me that the arguments which would need to be employed to defeat the dispensation application on the grounds of reasonableness are going to be exactly the same as they would be for the Lands Tribunal appeal……..I am clear here that the work you had to do in respect of the Lands Tribunal appeal was going to be of use in the County Court proceedings and as such under the authorities you are entitled to recover it.”

The Costs Officer went on to assess the costs on the footing of where work had been undertaken in the LVT appeal but had been of use and benefit in the dispensation claim, it was, in principle, recoverable subject to quantum. The effect of his decision was that he apportioned any overlapping costs as to 100% to the issue of dispensation so that, for example, an item such as the brief fee which concerned both dilapidation and LVT was allowed in full against the Landlord.

In approaching the assessment in this way the Costs Officer has brought into sharp focus the difficulties which arise on detailed assessment when the court, intentionally or unintentionally, makes an order for costs payable by reference to issues (here dispensation) rather than in a fixed proportion of the overall cost of the action . The reason for this is that an issue-based costs order entails an examination of each individual item claimed in the bill, so that only the costs relating to the issue covered by the order are allowed. In this way, the bill might have some items divided 50/50, others 100/0 and still more 70/30, with correspondingly complicated calculations being required when the figures are totted up. This is in stark contrast to a proportion based order, (such as that the Defendant pay 80% of the Claimant’s costs), when the need for a painstaking item by item examination of this nature is avoided because the irrecoverable work is catered for by the percentage reduction ordered by the judge. It is for this reason that issue based costs orders should not be made if, instead it is practicable to make a proportion based order or one that provides for costs to be payable from or until a certain date. (see CPR 43.3 (7)).

In this appeal, the Landlord submits that the Costs Officer’s approach was wrong. It contends that rather than apportioning the costs in the way he did, the Costs Officer should have found that the substantive part of the hearing before Judge Huskinson involved the LVT appeal and that the Tenants ought only be able to recover costs under the Order insofar as they were incurred in the application for dispensation. For their part, the Tenants contend that the Costs Officer’s decision should be upheld and that where, as here, the costs of both sets of proceedings were inextricably linked, and had a dual purpose, they are rightly recoverable in the proportions he allowed.

At the appeal, Miss Cafferkey of Counsel appeared for the Landlord and Mr Avis, Costs Draftsman, represented the Tenants. Both lodged skeleton arguments and an agreed bundle. At the close of submissions, I allowed the appeal with reasons to follow.

This can be stated shortly. The appellant was the landlord of the three respondents who were tenants under long leases of residential properties at Gilda Court, Watford Way, London, N7. On 27 September 2005 the Leasehold Valuation Tribunal for the London Rent Assessment Panel (“LVT”) reached decisions regarding the recoverability of service charges payable by the Tenants to the Landlord. The Tribunal concluded that of a total of £31,432.50, the sum of £20,717.25 had been reasonably incurred. However the Tribunal also decided that the Landlord had failed to comply with the consultation requirements set out in section 20 of the Landlord and Tenant Act 1985 and accordingly the maximum recoverable was £1,000 in relation to the whole block at Gilda Court.

On 14 February 2006, the Landlord issued proceedings in the Central London County Court seeking dispensation under section 20(9) from the relevant consultation requirements. On 17 March 2006 District Judge Langley ordered that the case proceed under part 17 CPR and directed that Particulars of Claim and the Landlord’s evidence be served by 30 March 2006, the case thereafter to be stayed pending the decision of the Lands Tribunal on the Landlord’s application for leave to appeal against the decision of the LVT.

On 10 April 2006, the President of the Lands Tribunal granted the Landlord permission to appeal against the decision of the LVT and directed that the case be listed before a Member of the Lands Tribunal who was also a Circuit Judge so that there could be raised at a single hearing, all the relevant arguments regarding (a) whether the section 20 consultation requirements had been satisfied, a matter within the jurisdiction of the LVT and the Lands Tribunal and (b) if not, whether they should be dispensed with under section 20(9) a matter within the jurisdiction of the County Court.

On 25 April 2007 Judge Huskinson gave further directions which included the lifting of the stay imposed by District Judge Langley. On 3 and 4 July 2008, he heard the Lands Tribunal appeal together with the dispensation claim and reserved judgment until 8 August 2008 when he dismissed both.

The Tenants served two bills pursuant to the Order. The first bill relates to the first respondent and is split into three parts; part one addresses costs payable by the Legal Services Commission and is of no concern to the Landlord. Part two claims “costs incurred in connection with the County Court proceedings to 31 December 2007 payable by the claimant”. Part three picks up those costs from 1 January 2008 until the conclusion of the case. The total sums claimed are £1,586.32 from the Legal Services Commission and £21,317.18 from the Landlord.

The second bill concerns the costs of the second and third respondents and is in the sum of £6,044.42.

Having heard argument on the preliminary issue, the Costs Officer went on to assess both bills, allowing £14,895.58 and £5,089.01 respectively against the Landlord.

Miss Cafferkey advances the Landlord’s case on the footing that the bills seek to recover the costs of all work done in both the LVT appeal and dispensation claim, making little or no distinction between the two. In her submission, (having represented the Landlord at the trial) the actual costs incurred by the Tenants in connection with the work done on the dispensation claim was very little, essentially being limited to the drafting of the defence which ran to just two pages. The substantive part of the hearing before the Judge had concerned the LVT appeal and all the evidence heard on 3 and 4 July 2008 had related to issues comprised in that case ; so much was clear from the judgment. The only issue which concerned the Judge in the dispensation claim was whether the Landlord had acted reasonably in carrying out the consultation exercise. This had been dealt with in just two paragraphs of his judgment (see paragraphs 34 and 35). It followed that whilst the costs in the dispensation claim ought to have been relatively small, what the Tenants had attempted to do on detailed assessment, was to recover the costs they had incurred in defending the LVT appeal in respect of which the Judge had made no order as to costs.

Miss Cafferkey further argues that the only costs to be allowed must be costs of and incidental to the claim (see section 51(1) Supreme Court Act 1981). As to the definition of “incidental” she relies on Re Gibson’s Settlement Trust (1981) 2 WLR 1; costs are “incidental to” proceedings if they are costs, charges and expenses which “directly and necessarily arose out of the proceedings” and included those which were incurred “casually or incidentally in the course of that exercise”. Costs could only be said to be “incidental” if they occur “in support and in conjunction with something else” (see judgment of Sir Robert Megarry VC). However, where costs are linked to a secondary claim, as here, the question to ask is whether the secondary claim has added any costs; if that is the case, only the extra costs are recoverable by the Tenants from the Landlord, under the principle in Medway Oil; (see Medway Oil and Storage Company Ltd v Continental Contractors Ltd (1929) AC 88 at see paragraph 29 below).

Miss Cafferkey recognises that the facts here are not on all fours with Medway Oil (there is no counterclaim for example). Nonetheless, the principle is relevant in the assessment of costs common to both claims. She submits that where the issues are common and the Landlord can show that there has been a joint expense, for example a conference with counsel, the costs should be divided so that if 80% of the conference had addressed the LVT appeal, the Landlord will only be liable for the remaining 20% relating to dispensation. Where the position is otherwise, that is to say where the costs are not common to both claims, under Medway Oil, the costs of the dispensation claim would only be recoverable insofar as they serve to increase the overall costs

Where costs are incurred in a separate action, Miss Cafferkey submits that these cannot be recoverable in a different set of proceedings, applying Department of Health and Social Security v Envoy Farmers Ltd (1976) 1 WLR 1018). In that case civil proceedings had been instituted concerning national insurance contributions payable by alleged employees of the Defendant. In their course, an issue was identified which, under the National Insurance Act 1965 could only be determined by a Minister. The Act gave no power to a Minister to award costs of determining such matters. The litigation was stayed in order to obtain the Minister’s decision which proved to be favourable to the defendant who, in consequence, went back to the court with a request that the stay be lifted and the action dismissed with costs to include the costs of and incidental to the inquiry to the Minister. On appeal, Jupp J reversed the order of the Master granting the Defendant’s request. On page 1021 at G he said this:-

“In my judgment, therefore whilst the costs of getting the matter referred are costs incidental to the court proceedings, the costs of the fresh proceedings then taken, that is to say the inquiry…are not incidental to the court proceedings. They are, as indeed the order under appeal itself has stated, incidental to the proceedings before the Secretary of State….”

It follows, in Miss Cafferkey’s submission, that costs incurred in the LVT appeal cannot be recoverable in the dispensation claim because they are not of or incidental to them.

Miss Cafferkey further relies on Wright v Bennett (1948) 1 KB 601 as authority for the proposition that where disbursements are incurred in the context of one set of proceedings (in that case the court of first instance) where the court had expressly disallowed the costs (in that case documents), such costs cannot be recoverable as costs in a subsequent appeal since no fresh disbursement is needed for those documents to be used on appeal and that their cost would not have been incurred for the purpose of the appeal itself.

For these reasons Miss Cafferkey submits that the Costs Officer erred. She argues that he ought not to have allowed costs that had been inextricably linked between the two claims but, on the contrary, should only have permitted those costs by which the dispensation claim had increased the overall costs. In financial terms, the amount attributable to the dispensation claim would then only have been about £7,000 (see the schedule annexed to her skeleton argument) as opposed to the £19,984.59 allowed.

Mr Avis contends that the only costs the Tenants have ever sought are those incurred in the dispensation claim. He submits that the cases relied on by Miss Cafferkey relate to costs incurred in a prior set of proceedings which were sought to be recovered in subsequent proceedings. That is not the case here, as the proceedings were heard together in a single hearing by one Judge over two days with all the evidence presented having had a dual purpose. So far as Wright is concerned, he contends that the Tenants are not attempting to recover costs incurred in the lower court which had been specifically disallowed by that court and Envoy Farmers does not avail the Landlord either. The dispensation claim was not a fresh set of proceedings as the Inquiry to the Minister had been in that case. On the contrary, the claim was being heard at the same time as the LVT appeal, the evidence had a dual purpose and the costs were incidental to both.

Mr Avis further submits that any such costs which were of material use and benefit in both sets of proceedings are potentially recoverable under the Order. He gives witness statements as an example. He argues that the costs required to defeat the dispensation claim would have been the same even if there had been no LVT appeal. It was only if those costs had not had a dual purpose that division would have been appropriate in which case any LVT costs would be excluded. That exercise had already been undertaken by the draftsman who drafted the bill when he had omitted any costs solely referable to the LVT appeal. Accordingly all that was left was, in principle, recoverable and the Costs Officer, having found that the costs in each claim would have been be exactly the same because they would have arisen in both sets of proceedings, albeit that they were dealt with under one umbrella, (that is to say, by one Judge in one court), applied the right test. He had correctly considered whether the costs incurred in the LVT appeal were of material benefit and use in the dispensation claim and had then allowed them (subject to quantum) where that had been the case.

The starting point is the Order which, for convenience, I repeat:-

“The claimant is to pay the costs of all three defendants in relation to the County Court proceedings…”

It follows that the Judge did not (and I am told was not asked to) make any order for costs in respect of the LVT appeal and my task is simply to construe the Order and give effect to its meaning (see Cope v United Dairies [1963] 2 QB 33 (Megaw J)) followed in Business Environment Bow Lane Limited v Deanwater Estates Limited [2009] EWHC 2014 (CH) Mann J.

In my opinion, the construction of the Order is straight forward. The Landlord is to pay the Tenants’ costs of the dispensation claim; each party is to bear their own costs of the LVT appeal. So much is agreed. The problem arises where LVT work benefited the dispensation claim; to adopt Mr Avis’s phrase, how are overlapping costs to be dealt with when the work undertaken had a dual purpose and was of material benefit to both, in other words when costs were common to each set of proceedings ?

Take, as an example, counsel’s brief for the trial. On Mr Avis’s case, the entirety is recoverable because counsel was needed for the trial in any event and the LVT aspect had not added to the cost because the work covered by the brief was of material use and benefit in the dispensation claim. Not so, says Miss Cafferkey. She contends that the only costs for which the Landlord is liable are those costs of and incidental to the dispensation claim. Where, as here, most of the brief related to the LVT appeal, counsel’s fee must be divided, so that that part attributable to the LVT is separated out, leaving only the dispensation aspect which will not be the 100% allowed by the Costs Officer but much less.

From this example it is plain that the root of the dispute between the parties lies with the common costs and the issue for the court to decide on this appeal is whether the Costs Officer applied the correct legal principles when making the appropriate allowances for these items.

Under Medway Oil (see speech of Viscount Haldane page 95 and page 100), where both the claim and the counter-claim are dismissed with costs, the amount that the Claimant will recover in defeating the counter-claim are the costs that arose solely defending the counter-claim, (for example counsel’s fee for settling the defence to counterclaim) together with costs that were common to both claim and counterclaim. In working out what to allow for the common costs, the Costs Judge does not apportion them throughout the bill, that is to say by attributing a fixed percentage to all items such as 50% to the claim and 50% to the counter-claim. On the contrary, there can be no apportionment in the absence of a special direction of the court to vary the principle in Medway Oil and the common costs must be divided, that is to say split up by the Costs Judge so that the claimant receives only those costs that he has had to bear because of the existence of the counter-claim. Accordingly:-

“…he [the Costs Judge] takes an item, a single fee on the plaintiff’s brief for example, and splits it into two notional fees, the one attributable to the claim, and the other to the counter-claim. This is not apportioning, in which the payment is treated as a single item and the question is to what it is attributable. It is in reality a notional division of what on the face of it is one item.” (Viscount Haldane page 102)

When the Medway Oil principle is applied in this way:-

“… it gives to both parties their costs of matters in which they have been respectively successful and leaves them liable only for the costs of those in which they have failed, in contrast with what would be the result of the apportionment rule-namely, that of the issues on which the respondents failed, not excepting that of fraudulent conspiracy, they would receive from the appellants a proportion of their costs of defeat while the appellants themselves would have to bear a proportion of their own costs of success” (see speech of Lord Blanesburgh page 110)

In Dyson Technology v Strutt [2007] EWHC 1756 (CH) Patten J defined “common costs”. In that case work done on clause 18 of an employment contract was recoverable but anything undertaken on clause 19 was not. At paragraph 2 he said this :-

“…common costs are non-specific costs [emphasis added] such as travelling expenses which are general to the action in the sense that they do not relate to the handling of any particular issue and would have been incurred whatever issues were involved and specific common costs [emphasis added] (such as the preparation of witness statements, research, attendances on clients, and brief fees) all of which relate to work done on more than one issue in the case, but which are not separated for the purposes of charging out time or as disbursements.

3 The CPR make no special provision for dealing with costs of this type and some of the difficulties in the assessment of these costs arise directly from a common failure by judges to appreciate the complexities which can be created by orders which seek to split the responsibility of the costs between the parties other than by an order for the payment of a simple percentage or proportion of the total costs bill”.

At paragraph 50, Patten J set out how specific common costs are to be assessed by the court:-

“The decision in Medway applied in Cinema Press [see paragraph 34 below] establishes that on a taxation of common costs of the kind the master described as specific common costs, it is appropriate to attribute part of a composite fee to the items of work which the fee was intended to cover. In the present case that exercise can be carried out to isolate a proportion of the brief fees paid on both sides to cover work solely done on the clause 18 claim. The same goes for time spent on preparing parts of witness statements which deal separately and exclusively with that issue. But what the decision in Medway does not do is to authorise the taxing master in a case like the present, to apportion the costs of work all of which is relevant to both claims”.

In Paragraph 55, Patten J set out how non-specific common costs are to be assessed:-

“On this basis the master was, I think, wrong to divide what he identified in paragraph 13 of his ruling as general costs [emphasis added]. The fact that those costs would have been incurred even if only the clause 19 claim had been brought requires them to be treated as costs of the action and not costs referable to the clause 18 issue.”

Such an approach to non-specific common costs is identical to that adopted by Keene J in Lavery v Ewing and Peterborough Health Authority (QB) 11 May 1995 (unreported). He held that general costs- it is to be noted that this description is used interchangeably with non specific common costs- which come into the category of indivisible items that would have been inevitably incurred by the successful party, were recoverable in full. This is plain from the judgment at B on page 10:-

“I have to construe the order for costs which forms part of the learned Judge’s order made by consent dated 23 July 1992, and in particular that phrase ‘the plaintiff’s costs of this action incurred against the second defendant’. In so doing in this review I am only concerned with the items covered by the 19 objections raised on taxation by the plaintiff; and no issue arises in respect of costs which can be attributed exclusively to the claim against one defendant or the other. It is right to distinguish between those items of costs where some genuine apportionment can be made and those where the costs would have been incurred and would have been the same if the plaintiff had been suing solely the second defendant. So far as the latter category is concerned, I do not find the District Judge’s reasons for allowing only half of these amounts persuasive. To suggest that a similar order for costs incurred against the first defendant would, in combination with the present order, have led to the plaintiff recovering his costs on these items twice over is unreal, since the plaintiff would have had to give credit against one defendant for what he had received from the other. I also do not find the references to ‘fairness’ made by the second defendant in argument before me of particular assistance. There is no automatic fairness in the second defendant having to pay only half the fee for the issue of the writ just because of a chance happening that there was another defendant to the action as well. These were items of costs to which the plaintiff was inevitably put in pursuing his claim, ultimately successfully, against the second defendant; and as a matter of principle, the successful party should be able to recover such costs……..I, therefore, accept that in respect of items covered by objections Nos. 3 [the writ fee] and 10 [the fee on setting down], the plaintiff should recover the whole of the amounts claimed, not merely the 50% awarded by he District Judge in this case.”

The reference to “Cinema Press” in Dyson by Patten J was to Cinema Press Limited v Pictures and Pleasures Limited [1945] KB356. In that case, the claimant was awarded the costs of the action except for the costs of the issue of damages as from the date of a payment into court which were awarded to the defendant. The Master apportioned the costs as to 100% in favour of the claimant and 0% in favour of the defendant on the grounds that “the costs of an issue are confined to increased costs” and that as he could not find the costs of either of the parties had been increased by reason of the issue of damages, the defendant was entitled to nothing under the order (page 357 c-d). The Master’s decision was upheld by the Judge but overruled by the Court of Appeal. On page 361 at c, Lord Goddard LJ said this:-

“Therefore it seems to us that the true rule of taxation in these cases is to be found in the Medway Oil and Storage case, which no doubt gives effect to the principles formerly applied by the common law masters. That case decides that, in the absence of special directions such as were given by Clauson J in Willcox v Kettell, where both claim and counter-claims succeed or are dismissed with costs, there is to be no apportionment and it follows from what we have already said that this applies equally to a case where one party is given the costs of the action, except those relating to an issue or issues, or where he is not only deprived of those costs but they are given to the other party. But this is not an end to the matter. While the House held that there was to be no apportionment, they held that there could and ought to be a division of some items which were common to both claim and counter-claim. “The distinction,” said Lord Haldane, “between division and apportionment may in certain circumstances be a thin one” but he went on to say that it was fundamental. The distinction will be found stated in Seton, 7^th edition, volume 1, page 250 and is in these terms. “When a court gives “part of” the costs of the action, it may do so in two ways; the one will involve an apportionment of the whole of the general charges, the other will extend only to the excess of expense incurred in consequence of the particular matter directed to be accepted”. Then it is said that, according to the settled practice of the Chancery Division, the formal direction carries a proportion of the costs of every general proceeding in the action. It is this that the Medway Oil and Storage case prohibits being done in the future, but Lord Haldane points out that there may be items which on their face are single but in reality double, that is, in part relate to the claim and in part relate to the counter-claim; and, will add, in part to one issue and in part to another. In such cases, he says, there must be a division”.

It follows that where common costs are claimed on the detailed assessment of an issue-based bill, it is the task of the Costs Judge to divide those that are specific where it is possible to identify the different purposes involved and then to share the costs between those purposes, for example the fee on a brief. But division is not required for non-specific common costs which a receiving party would have had to pay anyway, such as the court fee paid on issuing the proceedings, it being of no consequence that the case might concern two claims (as here) or to involve more than one defendant (the case in Lavery ). What the Costs Judge cannot do where there are items which on their face are single but in reality are double, (in that they relate in part to the claim and in part to the counterclaim, or in part to one issue and in part to another issue), is to apportion the costs on a percentage split throughout the bill such as 50/50; “In such cases, he [ Viscount Haldane in Medway Oil ] says there must be a division” (see judgment of Lord Goddard LJ in Cinema Press page 361 at g.)

How do these principles square with the facts in this appeal and to the Costs Officer’s approach on the detailed assessment?

In my judgment, the Cost’s Officer’s view that the work that the Tenants had to do in the LVT appeal was going to be of use in the dispensation claim and was therefore recoverable under the authorities, is incorrect. I consider that the starting point is that the Tenants are entitled to their costs attributable to the dispensation limb of the proceedings but that any costs claimed that are exclusively referable to the LVT appeal must be disallowed. Where costs are common to both claims and the costs have been increased because of the existence of the LVT appeal, the court must divide and not apportion any specific common costs, separating out the LVT element so that only the dispensation costs remain, but non-specific common costs must be left intact so that they are met by the Landlord in their entirety, subject to their amount being reasonable. What the court cannot do, with respect to the Costs Officer, is to say that where the costs overlap, they must be apportioned throughout the bill (in this case as to 100% dispensation and as to nil% LVT) as the Costs Officer did, on the basis that the work had to be done anyway and the arguments deployed to defeat the dispensation claim were exactly the same as for the LVT appeal.

What will be the effect of this on any re-assessment of the Tenants’ costs? Take a common item such as travelling to court for the first day of trial (see bill item 50). Such a cost would be incurred irrespective of whether there was an LVT appeal and accordingly it is not specific either to the LVT claim or to the dispensation claim. Subject to quantum, any such cost will be payable by the Landlord as to 100% (applying Dyson paragraph 55) as being an indivisible item of expense akin to a court fee, the example given by Keene J in Lavery.

Now take a common item such as the brief fee (see item 52) where it is possible by examination to see to what extent the work undertaken was specific to the LVT appeal and to the dispensation claim respectively. Adopting the approach taken by the Costs Officer, this would mean that the full fee would be visited upon the Landlord on the footing of counsel’s brief in the LVT appeal would have been be of use in making out the Tenants’ case in the dispensation claim and so, as happened on the detailed assessment, the Tenants would recover 100% of it, in this case £2,500. In my judgment, that approach is incorrect and what should have happened is that the brief fee ought to have been divided and the increased component relating to the LVT appeal separated out, leaving, as allowable, only the element relating to the dispensation claim. Had that been done, Miss Cafferkey submits that correct the division would have been 20% dispensation (recoverable) and 80% LVT (irrecoverable) making the fee £500 instead of the £2500 allowed by the Costs Officer under his 100% apportionment.

A similar exercise ought to have been performed in relation to all other specific common items in the bill such as witness statements. On assessment, the Costs Officer made an apportionment as to 100% to the dispensation claim but applying Cinema Press and Dyson, the LVT component (if any) should have been separated out so that the Tenants did not recover the augmentation to the overall costs created by the LVT claim. It follows in the result that the bill will need to be re-assessed applying these principles.

That said, the extent to which the Landlord will benefit from the application of the principles I have described on any re-assessment of the bill, is a matter of conjecture and may not be much. As Lord Goddard observed in Cinema Press on page 363 at b:-

“It may well be that the result in this case will be trifling, for, as I have already said, it is possible that there will be no division of the brief fee and instructions for brief…”

It follows that only if Miss Cafferkey is right and that when the common items in the bill are divided, the percentage payable for each item is such that large sums relating to the LTV appeal are separated out of the bill, that the difference will be significant. If, on the other hand, such division results in individual items being split into broadly the same percentages that the Costs Officer allowed across the board, the changes to his assessment will be de minimis. Thus the outcome will not be known until the re-assessment is completed.

A further point, case specific to the facts before me, is this. The dispensation claim was stayed by order of the court from 17 March 2006 until 25 April 2007 save for service of the particulars of claim and Landlord’s evidence, but the Costs Officer allowed costs in that period on the grounds that they overlapped with the LVT costs and the work would have been required in any event. I respectfully disagree with that decision. The Tenants’ entitlement to costs arises under the Order and is limited to the dispensation costs. During the time that the claim was stayed, there were no dispensation costs for that very reason and in my opinion it is not an answer for the Tenants to say that “that work would need to have been done anyway”. In my view the ambit of the Order does not permit the Tenants to collect costs in the period that the dispensation claim was stayed, even if the work undertaken proved useful later. Costs incurred during the stay could only have been costs of the LVT appeal because District Judge Langley had not given the Tenants authority to incur any costs in the dispensation claim in that period. Had it proved necessary to do dispensation work during the stay, the Tenant’s remedy to ensure that the cost of doing so was recoverable, was to apply to the Judge for an order lifting the stay. They did not do so. It follows that in my judgment, all such costs in the bill fall to be disallowed. In reaching this decision I draw reassurance from the fact that it sits comfortably with Envoy Farmers and the reasoning of Jupp J upon which Miss Cafferkey relies.

The Costs Officer was wrong to allow against the Landlord work undertaken in the LVT appeal because it was or might have been of use in the dispensation claim and would need to have been to be done anyway. What ought to have happened is that any costs caused by the existence of the LVT claim should have been separated out of the bill and any common costs divided where specific to issues and left intact where not specific, and not, as took place here, apportioned between the two claims. In the result the appeal is allowed and there will need to be a fresh detailed assessment applying the principles set out in Cinema Press and Dyson which I propose to reserve to myself on a date to be fixed convenient to the parties.

So far as permission to appeal is concerned, issue-based costs orders, whether made intentionally or unintentionally, continue to cause difficulty on detailed assessments, notwithstanding repeated exhortations from higher courts to avoid them (see Medway page 112, Cinema Press page 364 at d, Dyson paragraph 3 and most recently in cautioning the legal profession about the perils of such orders, Pacey v MOD 28 July 2009 (QB) Sharpe J (unreported)). Although under CPR 52.1.2 (see p 1482 Volume 1 White Book 2009), such an appeal would be treated as a first appeal, in my opinion the parties should agree to this matter being transferred to the High Court if the matter is to go further in view of the issues involved which continue to confuse the legal profession. The Respondent’s time for applying to me for permission (which should be in writing) is extended and will expire after 14 days have elapsed from the date of this judgment.