BOUNDARIES, BORDERS AND COSTS: IF YOU LEAVE THE ISSUE OF COSTS TO THE JUDGE YOU MAY NOT GET THE ANSWER YOU WANT

The judgment of the Court of Appeal in Powles -v- Reeves [2016] EWCA Civ 1375 shows the dangers of not being able to agree the principle of who should pay the costs of litigation. It shows the dangers of just leaving the issue of costs to the judge.  It also shows the dangers of litigating neighbour disputes generally (you may want to read the Canadian judgment set out at the end of this post).

“It is neither desirable nor generally practical for the whole case to be heard solely for the purpose of determining costs and it would usually be an unacceptable waste of the court’s resources, as well as the parties’ resources, to do so”2

“Questions of costs in boundary disputes are often difficult and, alas, easily escalate beyond the value of the disputed territory. Another judge might not have come to the same conclusions as this judge did in this case, but it is important for litigants to realise, especially perhaps boundary dispute litigants, that if they ask the judge to determine the instance of costs when a settlement is otherwise reached, it will be very seldom that this court will interfere with any such determination.”

THE CASE

The claimants issued proceedings in a boundary dispute.  The initial defendant sold his property during the course of the litigation and the new occupiers resolved the matter with the claimants.  Questions of damages were resolved. The only remaining issue was the question of  costs between the claimants and the initial defendant. This was left to the judge who was going to be the initial trial judge.

The judge ordered the initial defendant (Mr Reeves) to pay the costs.  She stated:-

“This is a difficult matter to comment on because nobody knows what the outcome of the trial would have been because we have not had a trial. Insofar as it is relevant, it does seem to me that if this matter had gone to trial then it is likely that a judge would have accepted Mr Reeves’ argument, or the argument put forward on behalf of Mr Reeves, that the most likely outcome would have been an acceptance of the joint experts’ report. But where I disagree with Mr Swirski is where he said that this would have meant that there would have been no costs against the first defendant. I cannot accept that the offer that he put forward in his defence, as being prepared to accept the boundary along the north of the hedge, is the same as the joint experts’ recommendation which follows a slightly different line. These matters may only be matters of millimetres, but as the correspondence shows, as sadly many boundary disputes show, every millimetre matters on these occasions. Also the offer put forward by Mr Reeves in his defence is an offer to settle and as the correspondence to which I have been referred shows, it has not been possible for a settlement to be reached in this case. It would always have been the consequence for Mr Reeves putting forward an offer to settle after proceedings had been issued that he would have to have paid the costs of the claimants and he has not been prepared to do so.”

THE APPEAL

Mr Reeves appealed to the Court of Appeal.  The Court of Appeal refused to interfere with the decision of the judge, holding the decision was well within the ambit of her discretion.

1. Before going to the grounds of appeal, it is appropriate to consider first the approach to be taken to an order for costs made in the circumstances of this case. Generally, judges are called upon to decide issues of costs after they have heard an application or tried an action, and the conclusions which they have reached on the substantive issues will usually determine or have a very important bearing on the appropriate order for costs. So much is stated in the Civil Procedure Rules. It does, however, sometimes occur that, as in this case, the parties reach a settlement of the substantive issues between them but are unable to agree the appropriate order for costs, and as part of their settlement invite the court to determine the question of costs.

2. I think it is fair to say that, deprived of the compass normally provided by the outcome of the case, judges often find this to be a difficult exercise. It is neither desirable nor generally practical for the whole case to be heard solely for the purpose of determining costs and it would usually be an unacceptable waste of the court’s resources, as well as the parties’ resources, to do so. The judge instead has to look for other factors to determine the appropriate order for costs, prominent amongst them being the result of the settlement, the conduct of the parties in the course of the litigation, any reasonable offers of settlement that may have been made and, in any case where it is tolerably clear, which party would have succeeded at trial.

3. The proper approach to be adopted by a court asked to determine costs in these circumstances is set out in the guidelines stated by Scott Baker J in R (Boxall) v Waltham Forest LBC [2001] 4 CCLR 258, adopted by this court in the context of private civil litigation in Brawley v Marczynski and another No.1 [2002] EWCA Civ 756 and discussed further by this court in the R (M) v Croydon Borough Council [2012] EWCA Civ 595, [2012] 1 WLR 2607 in the judgment of Lord Neuberger MR and the short concurring judgment of Stanley Burnton LJ.

THE EARLIER GUIDANCE

The earlier guidance referred to:

1. 1. “the principles which Scott Baker J deduced from the authorities in the case of Boxall v London Borough of Waltham Forest. He set out those principles as follows:

“(i) the court has power to make a costs order when the substantive proceedings have been resolved without a trial but the parties have not agreed about costs.

(ii) it will ordinarily be irrelevant that the Claimant is legally aided;

(iii) the overriding objective is to do justice between the parties without incurring unnecessary court time and consequently additional cost;

(iv) at each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion. In between, the position will, in differing degrees, be less clear. How far the court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.

(v) in the absence of a good reason to make any other order the fall back is to make no order as to costs.

(vi) the court should take care to ensure that it does not discourage parties from settling judicial review proceedings for example by a local authority making a concession at an early stage.”

AN ASIDE – BOUNDARY DISPUTES – THE VIEW OF A CANADIAN JUDGE

Whilst it may not have applied in this case the difficulties in resolving boundary disputes are legendary. There must be many judges hearing such disputes who felt like adopting the words of Justice E.M. Morgan in Morland Jones -v- Taerk  2014 ONSC 3061

“[23]           In my view, the parties do not need a judge; what they need is a rather stern kindergarten teacher. I say this with the greatest of respect, as both the Plaintiffs and the Defendants are educated professionals who are successful in their work lives and are otherwise productive members of the community. Despite their many advantages in life, however, they are acting like children. And now that the matter has taken up an entire day in what is already a crowded motions court, they are doing so at the taxpayer’s expense.

[24]           As I explained to Plaintiffs’ counsel at the hearing, a court cannot order the Defendants to be nice to the Plaintiffs. Litigation must focus on legal wrongs and legal rights – commodities which are in remarkably short supply in this action. As my colleague Perell J. put it in High Parklane Consulting Inc. v  Royal Group Technologies Ltd., [2007] OJ No 107 (SCJ), at para 36, “[i]t is trite to say that making a living is a stressful activity and that much of life can be nasty and brutish. Tort law does not provide compensation for all stress-causing and nasty conduct that individuals may suffer at the hands of another…”

[25]           I cannot help but comment that the courts as public institutions are already bursting at the seams with all manner of claims. To add to that public burden the type of exchanges that these parties have engaged in would be to let the litigious society stray without a leash – or perhaps without a lis.  I note the observation made to this effect by the Supreme Court of New York in Johnson v Douglas, 734 NYS 2d 847, 187 Misc 2d 509, at 510 (2001):

Although we live in a particularly litigious society, the court is not about to recognize a tortious cause of action to recover for emotional distress due to the death of a family pet. Such an expansion of the law would place an unnecessary burden on the ever burgeoning case loads of the court in resolving serious tort claims for injuries to individuals.

[26]           What is true regarding the death of a family pet is certainly true regarding the scatology of a family pet. There is no claim for pooping and scooping into the neighbour’s garbage can, and there is no claim for letting Rover water the neighbour’s hedge. Likewise, there is no claim for looking at the neighbour’s pretty house, parking a car legally but with malintent, engaging in faux photography on a public street, raising objections at a municipal hearing, walking on the sidewalk with dictaphone in hand, or just plain thinking badly of a person who lives nearby.

[27]           There is no serious issue to be tried in this action. The Plaintiff’s motion is therefore dismissed.

[28]           Both counsel have submitted costs outlines indicating that the parties have spent tens of thousands of dollars in legal fees. Costs awards are a discretionary matter under section 131 of the Courts of Justice Act. In exercising that discretion, Rule 57.01(1) of the Rules of Civil Procedureauthorizes me to consider a number of factors including, in Rule 57.01(1)(d), “the importance of the issues”.

[29]           There will be no costs order. Each side deserves to bear its own costs.”