Global costs order for two claims upheld by Court of Appeal

One of defendants to pay costs of claim it was not involved in because they asked for global order

The Court of Appeal has refused to disturb a judge’s costs order for failing to distinguish between the two related claims before him, because he was asked to take a global approach.

Lord Justice Lewison held that His Honour Judge Stephen Davies, sitting as a High Court judge, did not err in exercising his discretion because of the way the case was argued before him.

In Heathcote & Anor v Asertis Ltd [2024] EWCA Civ 242, Asertis, a litigation funder as assignee of Servico Build Tec Ltd, used a single claim form to start two claims which could be disposed of in the same proceedings.

The first was against Build Tec director Dale Heathcote (called the rewards claims) and the second against Mr Heathcote and Servico Contract Upholstery Ltd (‘Upholstery’, called the payment claim). HHJ Davies ruled against Asertis on the former but for it on the latter, awarding damages of £65,000.

There was, however, a wrinkle in relation to the rewards case, as an expert accountant noted that Build Tec had overpaid Mr Heathcote by £7,800, which he returned two weeks before trial.

On costs, HHJ Davies concluded that the claimant was the winner. He did not consider that the claimant’s pursuit of the rewards claim was unreasonable or exaggerated.

He accepted the claimant’s submission that its loss on the rewards claim turned on a detailed analysis of the law and the evidence, continuing: “That is important because, in my judgment, that shows that in this case it could never be appropriate to award the defendant its costs of the rewards claim, and the most that I ought to consider doing is to deprive the claimant of the costs of the rewards claim.”

He decided to order the defendants to pay 75% of Asertis’s costs.

On appeal, it was pointed out that this meant Upholstery was liable to pay 75% of the claimant’s costs of the rewards claim, even though it was not a defendant. Counsel also submitted Mr Heathcote was liable to pay 75% of the claimant’s costs of the rewards, even though it failed entirely on the pleaded basis.

Lewison LJ, giving the court’s ruling, said that if HHJ Davies had considered the two claims separately, “he might well have concluded” that Mr Heathcote and Upholstery had succeeded on the rewards claim and Asertis on the payment claim.

“He might well then have made an order requiring Asertis to pay the costs of the rewards claim; and an order requiring the two defendants to pay the costs of the payment claim.”

The question then was whether that was what he was asked to do. Lewison LJ found that, in their skeleton for the consequentials hearing, the defendants asked the judge to treat them as the successful parties.

“I cannot read into this the proposition that the judge was invited to consider each claim separately. It is directed at persuading the judge to treat the defendants as the overall winners. It does not, for example, acknowledge that the defendants were both liable for the costs of the payment claim or make any reference to the separate position of Upholstery.”

The defendants canvassing the possibility of a percentage costs order by reference to the overall costs of the case reinforced the point that the judge was being asked to consider costs globally. “Nor was it suggested that it was ever pointed out to the judge that the effect of his order was to make Upholstery liable for 75% of the costs of a claim that was never made against it.”

Both sides, represented by counsel, asked the judge to consider the question of costs globally, and that is what he did, Lewison LJ decided.

“Whether we would have made the same order as the judge is not the question on this appeal. Nor is the question whether… the judge would have been entitled to treat the two claims separately despite all parties’ invitation to consider them globally.

“The narrow question is whether, having regard to the way that the case was argued before him, the judge erred in exercising his discretion as he did. I consider that the answer to that question must be ‘no’.”

Erica Bedford and Chelsea Carter (instructed by BBS Law) for the appellants. Alfred Weiss (instructed by Primas Law) for the respondent.

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21 Mar 2024

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