COSTS AND CONDUCT 2: LOSER PAYS ALL APPLIES: MOORE IS NOT LESS

In The London Borough of Tower Hamlets -v- The London Borough of Bromley [2015] EWHC 2271 (Ch) Mr Justice Norris refused an application for an issue based order and made an order for costs under the general rule that the defendant pay the successful claimant’s costs.

“One should depart from the general rule only where the needs of justice and the circumstances of the particular case require, and a measure of caution is needed”

THE CASE

The claimant was successful in an action  for a declaration that it had ownership of a Henry Moore statue. In this second judgment the judge considered the issue of costs.

KEY POINTS

• The claimant had been successful upon one of the two grounds it claimed ownership.
• The key principle is that the “general rule” that the loser pays the winner’s costs applied.
• There was nothing in the claimant’s conduct of this case that displaced that general rule.
• The defendant was ordered to pay the claimant’s costs with no “issue based” orders.

THE JUDGMENT ON COSTS

1. I must now deal with matters consequential upon the main judgment.

2. Counsel for Tower Hamlets submit that the Claimant was wholly successful in the litigation, that the precise ground upon which it had succeeded had first been raised in correspondence in December 2013 (seven months before the commencement of proceedings) but had been resisted throughout, that its claim to have acquired title by operation of the Limitation Act had been placed in the forefront of its skeleton argument as the simplest means of determining the claim, and that consideration of the conversion claim necessarily involved an enquiry whether Bromley was the party in whom any cause of action was vested and so against whom the declaration as to title must be sought. They submit that a simple order that costs should follow the event (in application of the general rule under CPR 44.2(2)) is appropriate.

3. Counsel for Bromley submit that although the claim to acquire title by operation of the Limitation Act has succeeded, Tower Hamlets advanced (and lost) a claim to be the paper title owner in which they pursued legal points bearing on the history of the public bodies involved, consideration of which took up the bulk of the judgment. They submit that a costs order might well be made in favour of Bromley: but that the correct order is that Tower Hamlets should recover only 20% of its costs.

4. The general rule that the unsuccessful party will be ordered to pay the costs of the successful party. A consideration of all the circumstances may lead the Court to depart from that general rule.

5. Amongst the circumstances to be considered is whether a party has succeeded on part of its case even if it has not been wholly successful. Tower Hamlets succeeded on its claim to have acquired title by operation of the Limitation Act even though it was not wholly successful, because it did not succeed on its paper title claim. Bromley succeeded on part of its case, establishing paper title, though this did not avail it because it had lost the right to assert that title.

6. It is true that Tower Hamlets could from the outset have conceded Bromley’s paper title and simply fought the case on the limitation claim. But to seek declaratory relief on the basis of a concession would not have been wise: and an examination of who had the right of action to recover possession of the sculpture was an integral part of the limitation claim. So going through the history of the public bodies was not an irrelevant frolic. It was, of course, an integral part of Bromley’s unsuccessful opposition to the claim. The material of this type which Tower Hamlets itself deployed, and the material which it deployed in answer to Bromley’s stated position as to ownership (a distinction that is not easy to make) was in my view relevant to the limitation claim, and its introduction and consideration may fairly be regarded as part of the successful claim. Bromley’s criticism is more correctly confined to the time taken in written and oral argument to use this material to argue for a legal conclusion that Tower Hamlets was the paper title owner.

7. Another of the matters to be considered by the Court is the conduct of the parties; and “conduct” includes both (a) whether it was reasonable for a party to raise, pursue or contest any particular issue and (b) the manner in which issues so raised were pursued. In the instant case this is a neutral consideration. The way Tower Hamlets advanced its claim (in both senses) was reasonable: and the way Bromley advanced its counter-arguments was also (with one minor qualification) reasonable. The minor qualification is that I did not sense that Bromley really engaged with the limitation arguments until oral submissions (and misdirected some of its evidence to an ownership claim that was not being made). But that minor qualification does not justify any costs consequences. (I should make clear that I do not regard a finding of unreasonable conduct as in any sense a pre-requisite to the making of an “issues based” order: so that my finding that the factor is neutral in this case still leaves open the possibility of such an order).

8. In my judgment the precise question to be addressed is whether, because it unsuccessfully advanced legal argument on material that was relevant to the issue on which it won, Tower Hamlets should be deprived of some part of the costs which it would otherwise receive under the general rule, and an “issues based” order should be made. I would answer that question in the negative.

9. One should depart from the general rule only where the needs of justice and the circumstances of the particular case require, and a measure of caution is needed: Fox v Foundation Piling [2011] EWCA 790 at [62]. These two equally resourced and well advised local authorities chose their battle-grounds. On the one hand, it is possible to identify the discrete legal arguments that they advanced and to measure success and failure. Lack of success on some of those arguments does not of itself warrant an “issues based” order: HLB Kidsons v Lloyds Underwriters [2007] EWHC 2699. On the other hand, it is difficult to separate out evidence that could only be relevant to one argument and not to another. I found it helpful to know the history of the sculpture and of the estate on which it formerly stood in seeking to understand how Tower Hamlets had come to exercise possessory rights and who might have been expected to challenge that exercise and on what basis. In terms of argument relating to the paper title based on that material, the arguments were focused and well maintainable on either side, though ultimately not material because the eventual decision principally rested upon what had happened since 1996. The only sort of “issues based” order that could be contemplated is one providing for the payment by Bromley of a proportion of Tower Hamlet’s costs. Even taking a “broad brush” approach in the circumstances of this case I consider that any reduction would be an arbitrary one not based upon a principled analysis of costs incurred in relation to unsuccessful legal argument advanced by Tower Hamlets: and I am not persuaded that the needs of justice, the particular circumstances of this case or general considerations of fairness to Bromley require me to take this step. So the general rule will apply.