Oldcorn & Anor v Southern Water Services Ltd

On the 23rd January 2017 I handed down the main judgment in these proceedings [2017] EWHC 62 (TCC) and for the reasons set out in that judgment I dismissed the claim. The Claimants were successful on all the issues which fell for determination with the exception of causation, which was determinative of the outcome in the Defendants’ favour.

The parties were unable to agree the costs consequences and I heard argument on the morning of the 28th February 2017 but due to time constraints I was unable to deliver judgement that morning and judgment was therefore reserved.

The starting point is CPR r44.2 which provides:

“(2)

If the court decides to make an order about costs –

(a)

the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but

(b)

the court may make a different order.

(3)

(4)

In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –

(a)

the conduct of all the parties;

(b)

whether a party has succeeded on part of its case, even if that party has not been wholly successful; and

(c)

any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

(5)

) The conduct of the parties includes –

(a)

conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;

(b)

whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(c)

the manner in which a party has pursued or defended its case or a particular allegation or issue; and

(d)

whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.

(6)

The orders which the court may make under this rule include an order that a party must pay –

(a)

a proportion of another party’s costs;

(b)

a stated amount in respect of another party’s costs;

(c)

costs from or until a certain date only;

(d)

costs incurred before proceedings have begun;

(e)

costs relating to particular steps taken in the proceedings;

(f)

costs relating only to a distinct part of the proceedings; and

(g)

interest on costs from or until a certain date, including a date before judgment.

(7)

Before the court considers making an order under paragraph (6)(f), it will consider whether it is practicable to make an order under paragraph (6)(a) or (c) instead.”

During the course of argument I was referred to a number of authorities including Phonographic Performance Limited v AIE Rediffusion Music Ltd [1999] 1WLR 1507 Summit Property Ltd v Pitmans (a firm) [2001] EWCA Civ 2020, Travelers Casualty and Surety Company of Canada and Others v Sun Life Assurance Company of Canada (UK) Ltd and another [2006] EWHC 2885 (Comm), Straker v Tudor Rose (A firm) [2007] EWCA Civ 368, Fox v Foundation Piling Ltd [2011] EWCA Civ 790 and the recent decision of Coulson J in Harlequin Property (SVG) Ltd and Another v Wilkins Kennedy (A firm) [2016] EWHC 3233 (TCC), all of which concern the often difficult questions that can arise when seeking to apply CPR 44.2 and all of which demonstrate the extent to which every case is fact specific. That said, it is right to note that in more recent times there has been a tendency to emphasise the general rule that the unsuccessful party should pay the successful party’s costs so that for example in the case of Fox, Jackson LJ was moved to observe as follows at [62]:

“There has been a growing and unwelcome tendency by first- instance courts and, dare I say it, this court as well, to depart form the starting point set out in CPR r.44.3 (2)(a) too far and too often. Such an approach may strive for perfect justice in the individual case, but at huge additional cost to the parties and at huge costs to other litigants because of the uncertainty which such an approach generates. This unwelcome trend now manifests itself in (a) numerous first-instance hearings in which the only issue is costs and (b) a swarm of appeals to the Court of Appeal about costs, of which this case is an example.”

The Defendants’ position is that there can be no dispute but that the Defendants are the successful party and I should therefore apply the general rule, there being no circumstances which would justify any departure from the general rule. The mere fact that the Defendants lost on certain issues did not necessarily make a departure appropriate, particularly since the Defendants had a significant interest in clarifying the legal basis on which the claim could be made and the points they took were, it was submitted, reasonably taken. In addition, the issues on which the Defendants lost could not properly be said to have been separate or distinct issues, for the purposes of CPR r44.2. Moreover the Defendants also placed reliance on a number of aspects of the Claimants’ conduct of the litigation, namely their failure to follow the pre-action protocol; their failure to disclose a report of the model that produced a flood level above 3.4 metres AOD until the service of Mr Allitt’s final report in 12 August 2016; their failure to disclose documentation relating to quantum; their assertion of privilege over Mr Cowan’s report and the abandonment of the Rylands v Fletcher claim, shortly before trial.

Not surprisingly, the Claimants, for their part, rely on the fact that on a number of aspects of the claim they were successful, namely the duty / right to drain / Marcic issue; the standard of care to be applied; breach; the so-called common enemy / Arscott defence and quantum, all of which when taken together, it is said would justify a different order under CPR r 44.2 (4)(b).

In addition, they also point to aspects of the Defendants’ conduct of the litigation, emphasising the Defendants’ expressly avowed intention to fight the case tooth and claw, which it is said led the Defendants to take points which were without any merit, including arguing that the Claimants needed a right to drain into the Ditch and the fact that they did not have such a right meant that the Defendants did not owe the Claimants any duty and arguing that Marcic meant there was no duty of care, notwithstanding the decision in Dobson, and arguing that the Defendants were entitled to rely on the common enemy defence.

The Claimants also criticised the Defendants’ reliance on a model which was not exchanged in evidence, not presented to the Court and was designed and produced by an employee and not by the Defendants’ expert witness, Mr. Drinkwater.

The Claimants also criticised the Defendants’ failure to call a key witness, Mr Jarvis, on the issue of maintenance and the failure to serve documentation or witness evidence relating to changes made after the 2012 flood, and the like.

There is considerable overlap therefore between the matters relied on in respect of CPR r44.2 (4)(a) and (b).

Both parties also rely on the others’ approach to settlement, with the Claimants being critical of the absence of any offers of settlement by the Defendants, other than an offer of drop-hands settlement made during the course of a mediation in April 2016, an offer which the Defendants submit is a powerful factor in their favour.

Although the submissions made on the Claimants’ behalf are superficially attractive, the position to my mind is markedly different from the situation faced for example, by Coulson J in Harlequin. There, the claimants made a number of claims and on the three main issues were successful in part only on one and comprehensively lost the other two. In those circumstances, it is plain why Coulson J considered that it would be a rank injustice if, notwithstanding all of the work, time and costs generated by failed claims, the costs order ignored the overall results.

In the present case, the Claimants pursued a claim in negligence, and although successful in establishing duty and breach, they lost on causation. To my mind, such a claim is much more akin to that of the personal injury action referred to by Jackson LJ in Fox where, as he pointed out, the fact that a claimant has won on some issues and lost on other issues on the way, is not normally a reason for depriving the claimant of part of his costs. There is, as it seems to me, much force in the submission made on the Defendants’ part that it was reasonable for the Defendants to take the points that they did, albeit ultimately unsuccessfully on the scope of the duty and whether or not the on the facts there was a breach of duty and given that causation is an integral component of the tort of negligence, these issues cannot properly be said to be separate or distinct for the purposes of CPR r 44.2. Whilst there is some force in the criticisms made of the Defendants’ approach to expert evidence and the failure to call Mr Jarvis, such criticisms do not warrant a departure from the general rule and, in my judgment, this is not a case where justice would manifestly not be done if I made no allowance for the issues relied on by the Claimants where ultimately I found against the Defendants. This is therefore not a case where it would be appropriate to depart from the general rule. I am reinforced in this view by the knowledge that in April 2016, the Defendants offered a drop-hands settlement, an offer which was rejected by the Claimants, who pressed on to trial and ultimately lost of the issue of causation.

It follows in my judgment that the appropriate order is as follows:

I am conscious that I heard no argument in respect of the Defendants’ application for an interim payment on account of costs nor was it dealt with in the Claimants’ Note on Costs. As it seems to me, there is no good reason not to order a reasonable sum on account of costs. The issue therefore is whether the sum sought of £300,000 is such a reasonable sum. If the Claimants consider it is not a reasonable sum, then I invite short skeleton arguments from both parties, setting out their respective positions and I will make a ruling at the time this judgment is formally handed down.