Respondent Beats its offer, reduces costs claim by over 60% but gets no costs - A lesson in making offers earlier
Posted on 30th July 2024 at 09:45
By Sean Linley, Senior Costs Draftsman
In Nicholson & Anor v Hale & Anor (Land Registration - Easements - claim to the acquisition of a right of way by prescription) [2024] UKUT 210 (LC) (29 July 2024), the Respondent had made an offer of £26,000 two days before the assessment hearing, at the Costs Hearing the Appellants had claimed costs of £60,512.02. Costs were assessed at £22,558.42.
The Respondent had argued it they should have their costs of the Costs Hearing on the basis that they had beaten their offer of £26,000 and had obtained a significant reduction to the Appellant's costs. The judge accepted that it should take into account the amount by which the costs claim had been reduced as per CPR 47.20. Although this was a Costs Hearing, rather than detailed assessment proceedings the Judge was "entitled to take into account all circumstances, including the significant reduction achieved by the Respondents in the Appellants' recoverable costs".
The Tribunal, however, considered the implications of the timing of the Respondent's offer of £26,000:
"If however one concentrates on the Offer, the position seems to me to be as follows. The Respondents are entitled to their costs of the Costs Hearing, as from and including 16th July 2024. The Appellants are entitled to their costs of the Costs Hearing, up to and including 15th July 2024. This is potentially significant. On the Respondents' side it is apparent, from their statement of costs for the Costs Hearing, that a significant part of their costs of the Costs Hearing was incurred prior to 16th July 2024. On the Appellants' side it is apparent that a significant part of their costs of the Costs Hearing was also incurred prior to 16th July 2024. This includes Mr Wilmshurst's brief fee for the Costs Hearing, in respect of which I have been provided with evidence which demonstrates that this brief fee was deemed earned, and was paid on 12th July 2024."
Turning to the point around the significant reduction, Mr Justice Edwin Johnson observed that:
"there is the point made by the Respondents, which seems to me to have some force, that they have achieved a very significant reduction in the costs claimed by the Appellants. In particular, the Respondents succeeded on the issue of whether the Appellants could demonstrate financial loss. This had a very significant effect on the costs which the Appellants were able to recover because the Respondents' success on this issue pegged Mr Nicholson's recoverable time to £19 per hour. The resulting figure for Mr Nicholson's recoverable time would have been multiplied many times if the Appellants had been able to prove financial loss."
Consideration was also given to issues the Respondents had been unsuccessful in raising around conduct:
"there is some merit in the point made by Mr Wilmshurst that the Respondents were unsuccessful in their arguments in relation to conduct (conduct relating to ADR and pre-action conduct) and in arguing that the Appellants were not entitled to anything for Mr Nicholson's time. I think that there is something in the argument that the Respondents' failure on these issues, in particular in relation to the time spent on the conduct issues, should have some impact, in terms of costs."
It was concluded that:
69. Looking at matters in the round, and bearing in mind all the relevant circumstances and in particular the three competing factors identified above, I consider that the outcome of the Costs Hearing is fairly characterised as a score draw. In these circumstances I accept the primary submission of Mr Wilmshurst, in his further submissions on the costs of the Costs Hearing, which is that there should be no order as to the costs of the Costs Hearing.
70. I therefore conclude that there should be no order as to the costs of the Costs Hearing. The Appellants and the Respondents should bear their own costs of the Costs Hearing.
So despite having reduced the Appellant's costs by over 62% and bettering its offer by nearly £4,000, the Respondents were left bearing their own costs of the Costs Hearing.
An earlier offer would have undoubtedly made a significant difference. The Respondent's offer of £26,000 was made two days before the Costs Hearing, at a point much of the preparatory work and brief for Counsel had already been incurred. Had the offer been made earlier then there would have been a greater weight placed upon it.
In addition, it's notable that in the context of a Costs Hearing in the Upper Tribunal the judge found they were entitled to rely on the CPR 47 principles and able to take into account all circumstances including the significant reduction achieved. This also meant the judge was entitled to take into account the Respondent's failure in their arguments around conduct.
Nicholson & Anor is a lesson in making offers earlier in order to maximise the protection they afford whether by way of Part 36 or as an admissible offer as per CPR 44.2(4)(c). In the end the Costs Hearing was an expensive day out for all involved.
Should you have any queries arising from this article or upon costs generally then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail info@carterburnett.co.uk.
Tagged as: Costs Orders, Summary Assessment
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