"Judge: Tell me this: can I be confident that one consequence of the decisions on the preliminary issues is that, given the present financial position between the parties, at the end of the day Cleveland is going to be paying some money to Multiplex and what falls to be determined in January 2007 is how much? "
"Judge: But we know that at the end of the day you will be paying some cash to Multiplex, although we do not know how much. "
"You will see that Multiplex has endeavoured to share with you its assessment of the most important sub-issues arising from schedule 2, leading to an overall proposal in relation to schedule 2. The purpose of this is twofold: (i) to identify the analysis underpinning the overall proposal; and (ii) to set the agenda for further discussions. As to this second point, Multiplex invites your clients to engage with it in relation to the sub-issues in the hope and expectation that such dialogue might at least narrow the issues before the court if, for whatever reason, your clients are not minded to accept the overall proposal. Since many of Multiplex's previous settlement proposals have been completely ignored, we emphasise that Multiplex is ready, willing and able to explore with your clients the possibility of reaching agreement on any aspect of this action, however modest in the context of the action as a whole."
"This rule applies where upon judgment being entered: "(a) a claimant fails to obtain judgment more advantageous than a defendant's Part 36 offer; or "(b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant's Part 36 offer."
"(1) The court has discretion as to: "(a) whether costs are payable by one party to another; "(b) the amount of those costs; and "(c) when they are to be paid. "(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 ... "(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including: "(a) the conduct of all the parties; "(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and "(c) any payment into court or 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 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 his case or a particular allegation or issue; "(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his 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) interests on costs from or until a certain date, including a date before judgment.
"I draw attention to the new Rules because, while they make clear that the general rule remains, that the successful party will normally be entitled to costs, they at the same time indicate the wide range of considerations which will result in the court making different orders as to costs. From26 April 1999 the 'follow the event principle' will still play a significant role, but it will be a starting point from which a court can readily depart. This is also the position prior to the new Rules coming into force. The most significant change of emphasis of the new Rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. In doing this, the new Rules are reflecting a change of practice which has already started. It is now clear that too robust an application of the 'follow the event principle' encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. If you recover all your costs as long as you win, you are engaged to leave no stone unturned in your effort to do so."
"Where evidence, be it documentary or oral, was reasonably appropriate both for a point on which the council won and for a point on which Walton won, then it seems to me that the costs relating to that evidence should at least prima facie be those of the council because that evidence would have been reasonably necessary for the council's case and the council was the overall winner. It is perhaps in this connection that it is most important to bear in mind that the council was the overall winner."
"16. In my judgment, it is also no longer necessary for a party to have acted unreasonably or improperly before he can be required to pay the costs of the other party of a particular issue on which he (the first party) has failed. That is the substance of what the Master of the Rolls was there saying. That that must be so is shown partly by the earlier citation at pages 1522H to 1523B but, more importantly, by the only other case to which, for my part, I would have thought it was necessary for this court to be referred, namely the case of Johnsey Estates (1990) Limited v Secretary of State for the Environment ... "17. It is thus a matter of ordinary common sense that if it is appropriate to consider costs on an issue basis at all, it may be appropriate, in a suitably exceptional case, to make an order which not only deprives a successful party of his costs of a particular issue but also an order which requires him to pay the otherwise unsuccessful party's costs of that issue, without it being necessary for the court to decide that allegations have been made improperly or unreasonably."
"29. It does seem to me that the judge has, with the greatest respect, fallen into an error of principle. In what may generally be called commercial litigation (and this case, like Dyson's was proceeding in the Leeds Mercantile Court) the disputes are ultimately about money. In deciding who is the successful party the most important thing is to identify the party who is to pay money to the other. That is the surest indication of success and failure. It is not irrelevant that it was Time Talk who felt the need to appeal the judge's judgment. It is not normally right to segregate a large element of the costs and thereafter to decide who the successful party is. It needs to be decided at the outset. "30. I do not, moreover, consider that the judge was right to segregate the costs associated with instructing experts and thus most of the costs of proving the claim. Litigants are entitled to make contracts and leave the fee payable for the costs of services rendered to be fixed by the court. It is not a justifiable exercise of discretion to castigate this as 'highly unorthodox' and refuse to make any order as to costs. The judge's task was, of course, made more difficult by reason of the fact that the parties had not agreed a price for the claimant's services, but difficulty for the judge is not, of itself, a reason for making no order on the costs. Nor is the fact, if it be true, that once relations break down when no price is fixed, a dispute is inevitable. It is, after all, a judge's job to resolve disputes whether they are inevitable or not. "31. For these two reasons the exercise of discretion by the judge was vitiated by an error of principle. If he had asked himself who was the successful party, before segregation of the effective costs of proving the quantum meruit claim, he would in my judgment have had to answer that it was the claimants who recovered more than the defendants had ever offered and thus it must be the claimants who were the successful party. The question would then be what proportion, if any, of their costs should they recover. That question is now for this court. The judge was, of course, correct to be influenced by the fact that most of the time spent in court was spent on an issue on which the claimants failed and that that issue was whether one of the claimants' employees had acted dishonestly, albeit at 'the least serious end of the spectrum'. Bearing that matter in mind, I would hold that the claimants' success should be reflected by the recovery of a small proportion of their costs. I would fix that proportion at 25 per cent and would according allow the cross-appeal to that extent."
"21. ... The two-day hearing was concerned overwhelmingly with the issue of exaggeration, and the University won on that issue. Mr Farmer's submission that that was only one issue, the other being the quantification of the claim, is not persuasive. Quite simply, that second issue was hardly an issue at all once the Recorder had found the exaggeration and the cut-off date. It is true that that cut-off date was later than the one advanced on behalf of the University, but, viewed objectively, the totality of the judgment was overwhelmingly favourable to the University. It was in real terms the winner. Moreover, the costs incurred after the reduction of the money in court were expended almost entirely on the preparation for and conduct of a trial in which the central issue was that of exaggeration. "22. There are two additional points which seem to me to have called for the affording of considerable weight by the Recorder, whereas the transcript does not suggest that he afforded them any weight at all. The first is the strong likelihood that, but for exaggeration, the claim would have been settled at an early stage and with modest costs. The second is that at no stage did Mrs Painting manifest any willingness to negotiate or to put forward a counter-proposal to the Part 36 payment. No one can compel a claimant to take such steps. However, to contest and lose an issue of exaggeration without having made ever a counter-proposal is a matter of some significance in this kind of litigation. It must not be assumed that beating a Part 36 payment is conclusive. It is a factor, and will often be conclusive, but one has to have regard to all the circumstances of the case."
"29. The modern tendency is at least to consider the award of costs on an issue-by-issue basis. The Recorder addressed that but dismissed it because of the difficulty in the preparation of a bill of costs and the enormous complication of the process of detailed assessment. I agree with that. I also agree with him that it is better, if possible, to deal with the matter another way. His judgment shows, however, that he did not find another way: he resorted to costs following the event. In doing so I fear he fell into error. "30. His error in my judgment was to fetter his discretion and not to go on to consider, as he should have considered, what alternatives were available to him. The most obvious and frequently most desirable option is that signposted inCPR 44.3 paragraph (6)(a), namely to order a proportion of the party's costs to be paid. The Recorder had directed his mind to paragraph (6)(f), namely ordering costs relating only to a distinct part of the proceedings, but he seems to have overlooked paragraph (7) which required him, where he would otherwise have considered confining costs to part of the proceedings only, to make instead, where practicable, an order under (6)(a) for a proportion of the costs. Ordering a proportion of costs obviates all the difficulties he acknowledged in an assessment of how much is properly to be allocated to each and every issue considered in isolation. Better by far to decide, despite the difficulty and imprecision of the calculation, that the relevant issue or issues should bear a percentage of the costs taken overall. As the Recorder erred in principle, the appeal on this aspect must be allowed ... "33. I take as my starting point the Recorder's decision, which I would honour, to exercise his discretion to give separate judgments on claim and counterclaim on the basis that it would make no difference as to the costs. The order as drawn did in fact allow the set-off because paragraph 3 of the judgment ordered the defendants to pay the claimant the difference between the sum awarded to the claimant on his claim and the sum awarded against him on the defendants' counterclaim. How, in circumstances like that, does one decide who the unsuccessful party is? This was, after all, a form of commercial litigation where each side was claiming money from the other. Costs following the event is the general rule and in this kind of litigation the event is determined by establishing who writes the cheque at the end of the case. Here the defendants do. They were the unsuccessful parties and my starting point is that the claimant is entitled to the costs of the proceedings, claim and counter-claim taken together ... "44. Balancing all those factors how then is justice to be done? The claimants cannot have the whole of their costs which follow the event that they were successful to the tune of£5,000 -odd. Some recognition has to be paid to the fact that a large part of the trial was taken up with the counterclaim on which the defendants did have some, albeit limited, success. The object of the exercise is to make a just and fair award of costs. Standing back and looking at the matter in the round it seems to me that the claimant enjoyed the greater share of the spoils of victory. In my judgment justice is achieved by awarding the claimant 60 per cent of the costs of the proceedings, claim and counterclaim, lumping them together. The district judge assessing these costs will still be able to decide to what extent Mr Rougier's fees must be disallowed."
"22. ... The passages point out that, in deciding what order to make on an issue-based approach, the court may decide that, in relation to an issue which the party successful overall has lost, that party should be deprived of his costs of that issue; or even, in a suitable case, that that party should pay the costs of the otherwise unsuccessful party on that issue."
"25. HHJ Wyn Williams clearly did have in mind the need to consider whether this was a case in which to depart from the 'follow the event principle' in respect of the overall result. But his reasoning was not that he should make separate orders in respect of discrete or distinct issues; not even that, if there were discrete issues, he should make an order of a proportionate nature which reflected the success on one issue and failure on another. The order which he made was not, on analysis, an issue-based order at all. It was a global order which deprived the claimant of any costs, because as the judge saw it he had obtained so much less by way of damages than he had originally been claiming. The judge did not explain why he did not choose to adopt a conventional issue-based approach. The possibility of such an approach had been canvassed in the skeleton arguments that were before him; although, in fairness to him, it should be said that it is less than clear that either party was urging him to approach the matter on an issue basis. Nevertheless, that was what the rules required."
"82. ... I am not for a moment saying that it is not open to a judge to take account of the fact that a party has failed to beat an offer by a small margin. In these days where both sides are expected to conduct themselves in a reasonable way and to seek agreement where possible, it may be right to penalise a party to some degree for failing to accept a reasonable offer or for failing to come back with a counter-offer."
"28. The primary question for us is whether the change in the language of Part 36 results in a change of approach. Under the old rule the claimant would have recovered her costs (subject to any derogation from the rule that costs follow the event underCPR 44 ). All one can glean from the change is that the purpose of the amendment was to replace the old system of payment in with offers to settle and to apply the same costs consequences irrespective of whether the offer was for the payment of a sum of money in a money claim or an offer of terms and conditions on which to settle non-money claims. The previous practice for the latter -- the 'more advantageous' approach -- became the uniform approach for both. For money claims as well as for non-money claims the same questions arise underCPR 14 (1) namely, under (a) whether the judgment is 'more advantageous' than the offer and under (b) whether the judgment is 'at least as advantageous' as the offer. "29. It is clear that in non-money claims where there is no yardstick of pounds and pence by which to make the comparison, all the consequences of the case have to be taken into account. Why, therefore, should the rule be different where a money claim is involved? Mr Coughlan proffers a compelling answer, namely that a pure monetary comparison produces clarity and avoids placing value upon subjective elements such as the stress and anxiety involved in protracted, risky litigation. I see the force of that argument. In this case, as in so many, the amount of the costs exceeds the amount in dispute by a significant margin and any rule which reduces the scope of argument over costs is a salutary one. "30. Nonetheless, the Court must give effect to the new rule and if that has introduced a change in practice, so be it. Are the concepts of bettering a Part 36 payment and obtaining a judgment more advantageous than the Part 36 offer synonymous? Posed in that way, perhaps they are, but in the context of the new Part 36, where money claims and non-money claims are to be treated in the same way, 'more advantageous' is, as Rix LJ observed in the course of argument, 'an open-textured' phrase. It permits a more wide-ranging review of all the facts and circumstances of the case in deciding whether the judgment, which is the fruit of the litigation, was worth the fight. "31. The answer must, in my judgment, take account of the modern approach to litigation. The Civil Procedure Rules, and Part 36 in particular, encourage both sides to make offers to settle. Compromise is seen as an object worthy of promotion, for compromise is better than contest, both for the litigants concerned, for the court and for the administration of justice as a whole. Litigation is time-consuming and it comes at a cost, emotional as well as financial. Those are, therefore, appropriate factors to take into account in deciding whether the battle was worth it. Money is not the sole governing criterion. "32. It follows that Judge Knight was correct in looking at the case broadly. He was entitled to take into account that the extra£51 gained was more than offset by the irrecoverable costs incurred by the claimant in continuing to contest the case for as long as she did. He was entitled to take into account the added stress to her as she waited for the trial and the stress of the trial process itself. No reasonable litigant would have embarked upon this campaign for a gain of£51 ."
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