DISMAL CORRESPONDENCE, COSTS AND CONDUCT: THE ADMINISTRATIVE COURT GIVES A WARNING
It is a rare to have a specific judgment from the Administrative Court on the question of costs. In Taylor -v- Honiton Town Council  EWHC 101 (Admin) Mr Justice Edis considered issues relating to costs.
“I consider that, generally, the kind of conduct most relevant to costs is the conduct of the parties in dealing with the dispute once it has arisen rather than conduct which caused it in the first place. This is by no means an inflexible rule, but as a principle is sound.”
“It is an important function of the costs jurisdiction that it operates as an incentive to parties to resolve disputes where possible.”
- When considering issues of “conduct” in relation to costs the court was normally concerned with conduct dealing with the dispute, not the conduct that caused the dispute in the first place.
- In this case, although the claimant was successful and recovered costs to a certain date, he was ordered to pay the defendant’s costs from the date of a latter which offered terms which should have been accepted.
The court had, in an earlier judgment, considered an application for review of a decision by the defendants. Giving judgment in that action the judge observed
“I have considered with some care whether I should make any order at all in this case and whether I should decide the questions raised by the parties since they are academic because the Decision has been withdrawn, several times. The parties have expended costs on these proceedings, and permission has been granted which has encouraged them, no doubt, to continue in the hope of securing a decision.”
“It is an important function of the costs jurisdiction that it operates as an incentive to parties to resolve disputes where possible. In this case a long sequence of correspondence came into existence in which the parties debated how the dispute might be resolved. Of course, the longer that went on, the greater were the costs and the more difficult settlement became. The claimant’s solicitors accepted, as will appear, as early as June 2016 that the only real issue between the parties was costs. How had that come about, and how then did the case remain contested until trial?
In the event an order was made quashing a policy and declaring another decision as to breach and sanctions lawful.
THE SUBSEQUENT DECISION ON COSTS
The judge considered arguments relating to conduct of the parties prior to, and during, the proceedings.
I consider that, generally, the kind of conduct most relevant to costs is the conduct of the parties in dealing with the dispute once it has arisen rather than conduct which caused it in the first place. This is by no means an inflexible rule, but as a principle is sound. The general rule is that the unsuccessful party pays the successful party’s costs and this follows the resolution of the issues giving rise to the dispute. Conduct only becomes relevant where the court is invited to depart from that general rule.
The successful party in this case was Mr. Taylor in that he secured the quashing of the Decision. However, this is a case where, in my judgment, the interests of justice require a departure from the general rule on conduct grounds. It is an important function of the costs jurisdiction that it operates as an incentive to parties to resolve disputes where possible. In this case a long sequence of correspondence came into existence in which the parties debated how the dispute might be resolved. Of course, the longer that went on, the greater were the costs and the more difficult settlement became. The claimant’s solicitors accepted, as will appear, as early as June 2016 that the only real issue between the parties was costs. How had that come about, and how then did the case remain contested until trial? It is also relevant that the claimant failed on the principal argument he made which was contested, namely his contention that Honiton, rather than East Devon was the decision maker in respect of the decision as to breach. That was an argument which neither local authority could accept.
There was subsequent correspondence between the parties which included offers of settlement and the judge analysed these in detail.
I will not continue my recitation and analysis of this dismal correspondence. Consent Orders were exchanged but not agreed. By now, Honiton was seeking to limit its liability to pay costs to the date of its offer of 19th March and, later, sought payment of its costs from a certain date. Eventually, after many efforts to settle the claim Honiton instructed Foot Anstey, solicitors, to act on its behalf. By this stage, June 2016, the proceedings had been on foot for 3 months and the costs of both sides were already a significant sum. The opportunity to settle it when costs were at a reasonable level had been lost because of the claimant’s refusal to compromise. Foot Anstey sought to deal with the matter by proposing a “drop hands settlement” by their letter of 28th June 2016 which agreed all the terms sought by the claimant except costs. By this stage, Honiton was able to rely on its offers and had an arguable case for orders in its favour which could be set against the claim for costs made by the claimant which had been conceded as recently as 29th March 2016.
THE RESULT: A (PARTIAL) REVERSAL OF THE NORMAL PRINCIPLE THAT THE WINNER PAYS
i) That these proceedings were issued too quickly because of a fear of a time limit which was never a difficulty for the claim which was then contemplated and the only claim which was ever brought. The justification for this unnecessary haste included an inappropriate allegation of dishonesty against the Town Clerk. These considerations are relevant to costs.
ii) That Honiton substantially resolved the dispute by its decision in its letter of 26th February 2016 which preceded issue. The loose ends could and should have been agreed after that without the need for any proceedings.
iii) That the subsequent offers to pay costs on 19th and 29th March should have been accepted. The claimant has achieved nothing of value since then. It is unsurprising that Honiton has changed its position on costs since then given the matters I have set out above. The claimant’s failure to take this into account on 29th June 2016 when he had appreciated that the only issue between the parties was costs was unreasonable, see  and  above.
iv) That the conduct of the proceedings by the claimant has not been characterised by a genuine attempt to compromise them on the basis of the law as properly understood. His real motive from a very early stage has been to avoid the consequences of the decision of East Devon by preventing Honiton from censuring him and publicising that action after their withdrawal of the original sanctions. He has used a variety of arguments to attempt to achieve this which have lacked merit. He has failed in that regard.
v) Nevertheless I should make an order which reflects the fact that the claimant has succeeded in securing the quashing of a sanctions decision which was imposed on the basis of a policy adopted contrary to the advice of council officers and which has since been revoked. Given my finding at (i) above, the order I intend to make may be thought generous. Nevertheless, it appears to me to achieve broad justice. The defendant’s letter of 19th March 2016 is a key document. It was clear enough, but any possible doubt was resolved by the letter and draft order of 29th March 2016. From that point on the claimant’s continuation and conduct of these proceedings was unreasonable.
1. The defendant will pay the claimant’s costs of the proceedings on the standard basis to be assessed if not agreed in so far as those costs were incurred up to and including the 19th March 2016.
2. The claimant will pay the defendant’s costs of the proceedings on the standard basis to be assessed if not agreed in so far as those costs were incurred on and after 20th March 2016.
Issue based costs orders
- Issue based costs orders: its not money in the bank.
- Costs and conduct: a percentage reduction for a successful claimant.
- Proportionate costs orders when costs are £8 million and £10 million apiece: High Court decision.
- It’s not just winning but how you play the game: costs orders when both parties assert they have “won”.
- A game of more than one half: the costs order in Hamed -v- Tottenham Hotspur
- Costs and Conduct 1:
- Costs and Conduct 2: Loser pays all applies.
- Costs and Conduct 3: The Court of Appeal and issue based costs orders
- Issue based costs orders in the Administrative Court
- The limits of issue based costs orders
- Costs, Conduct, Part 36 and the “winning party”.
- How relevant are Part 36 offers to issue based orders?
- Offers to settle: costs, conduct & a whole lot more.