Percentage-Based Costs Order Upheld For Litigation With Mixed Outcomes

Appellate courts will rarely disturb a trial judge’s discretionary costs order absent clear error of principle, even where parties dispute issue-based assessments, as demonstrated in this High Court appeal dismissing challenges to a 50/50 costs split.

DANIEL FAMILY HOMES LIMITED & TERRY DANIEL V JEFFREY GOLD & PATRICIA GOLD [2025] EWHC 2697 (Ch)

In Daniel Family Homes Ltd v Gold, the High Court dismissed an appeal against a trial judge’s costs order requiring each party to pay 50% of the other’s costs following a five-day County Court trial involving possession proceedings and counterclaims. The appellants challenged the order under CPR 44.2, arguing the judge incorrectly estimated that 50% of the respondents’ costs related to their money claim, failed to give sufficient weight to the appellants’ success in defeating a beneficial interest claim, and inadequately considered the respondents’ conduct. Mr Justice Cawson held that appellate courts will only interfere with a trial judge’s costs discretion where a clear error of principle is established, a formidable threshold the appellants failed to meet. The judge was entitled to reject an issue-based costs order in favour of a percentage-based approach reflecting the mixed outcome. She had the advantage of presiding over the trial and assessing how issues unfolded and the parties’ conduct. No presumption exists for summary assessment after a five-day trial. The court would require substantial persuasion to substitute its discretion for that of the trial judge, and the 50/50 order was within the proper exercise of judicial discretion.

The Judge had a wide margin of appreciation so far as the exercise of her discretion in relation to costs was concerned, and an appeal court will rarely interfere with such an exercise of discretion unless some clear error of principle can be established… The Judge had the advantage over this Court of seeing how the various issues played out during the course of the trial, as well as reaching a view in respect of the conduct of the respective parties.

Citations

Volpi v Volpi [2022] EWCA Civ 464 An appeal court may only interfere with a trial judge’s conclusions on primary facts where the decision was one that no reasonable judge could have reached, highlighting the high threshold for appellate intervention on factual findings impacting costs decisions. Swordheath Properties Ltd v Tabet [1979] 1 WLR 285 A landlord is entitled to damages for trespass without proof of loss, measured by the market rental value of the property during the period of unauthorised occupation. Thomas v Thomas (1842) 2 QB 851 Consideration in contract law must be of some value in the eyes of the law, but need not be adequate, allowing even nominal value to support an obligation relating to costs or other liabilities. Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5 An appellate court must avoid evaluating costs findings by narrowly dissecting judgments and instead respect the trial judge’s broader evidential perspective. Chitty on Contracts, 35th edn, para 6-004 Consideration may consist of a benefit to the promisor or a detriment to the promisee, and contract enforceability relevant to costs liabilities does not require both elements.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

An appellate court will rarely interfere with a trial judge’s exercise of discretion on costs and will only do so where a clear error of principle is established. [60]
Where a trial judge has considered an issue-based costs order but determines that a percentage-based approach is more appropriate to reflect the overall outcome of the litigation, this is a proper exercise of their discretion. [59, 61]
There is no presumption in favour of the summary assessment of costs at the conclusion of a multi-day trial, and parties cannot be expected to have produced Statements of Costs for such an assessment in the absence of a specific direction. [58]
A trial judge, having presided over the proceedings and witnessed how the various issues were litigated, is in the best position to assess the parties’ overall success and conduct for the purpose of making a costs order. [60, 61]
The fact that a party was successful on specific issues does not, in itself, demonstrate that a trial judge gave insufficient weight to those successes when making a global costs order reflecting the mixed outcome of the case. [61]

“The Judge had a wide margin of appreciation so far as the exercise of her discretion in relation to costs was concerned, and an appeal court will rarely interfere with such an exercise of discretion unless some clear error of principle can be established… It is clear from how she dealt with the question of costs… that she had in mind the alternative of an issue-based order… but quite rightly, I consider, concluded that matters were better dealt with by a percentage based approach to costs.”

Key Findings In The Case

The trial judge ordered that each party pay 50% of the other party’s costs, adopting a percentage-based costs order rather than issuing an issue-based order, having considered this to be the fairest reflection of the mixed outcome of the litigation and the parties’ conduct throughout the proceedings [10, 59].
The judge considered and rejected the appropriateness of an issue-based costs assessment, concluding that such an order would not be suitable given the complexity and interrelation of the matters in dispute and instead opted for a straightforward apportionment reflecting the shared success and failure of the parties [59].
The judge found that 50% of Mr and Mrs Gold’s costs had been spent pursuing their unsuccessful beneficial interest claim, a material consideration that influenced the 50/50 costs order, notwithstanding that Mr and Mrs Gold partly succeeded on their money claims [10, 61].
The judge did not find any material non-compliance or costs misconduct by either party which would justify a departure from the standard percentage allocation; she made no adverse finding against Mr and Mrs Gold for not providing a pre-hearing statement of costs, finding instead that summary assessment was not expected given the length and complexity of the trial [58].
Despite DFH and Mr Daniel’s partial success on certain issues—such as defeating the beneficial interest claim and having loan offset arguments dismissed—the trial judge considered that this success was sufficiently balanced by Mr and Mrs Gold’s partial success on their loan claims and other matters, justifying the equal division of recoverable costs between the parties [60–61].

"I would require a great deal of persuading that I should substitute my own discretion for that of the Judge in respect of the order that she made in respect of costs, namely that each party should pay 50% of the other party’s costs… she had in mind the alternative of an issue-based order as to costs, but quite rightly, I consider, concluded that matters were better dealt with by a percentage based approach to costs."

The High Court’s decision in Daniel Family Homes Limited v Gold [2025] EWHC 2697 (Ch) confirms the formidable obstacle facing parties who seek to challenge percentage-based costs orders on appeal.

Background

The proceedings originated in the County Court at Oxford, where Daniel Family Homes Limited (DFH) brought a claim for possession of 28 Rogers Lane, Stoke Poges, Slough (the Property) and sought damages for trespass. The defendants, Jeffrey Gold and Patricia Gold, resisted the claim and brought a Part 20 Claim. They asserted a beneficial interest in the Property through proprietary estoppel, a resulting or constructive trust, or a Declaration of Trust. They also claimed repayment of loans totalling £629,576.53 plus interest. [§5]

DFH and Mr Daniel, the Part 20 defendant, denied the Golds had any beneficial interest. They contended that an agreement existed for the Golds to pay rent for their occupation, which would be set off against the loan amounts, resulting in no money being owed. They later alleged an Assured Shorthold Tenancy (AST) had been agreed in 2008. They also claimed a set-off for charges related to the storage of Mr Gold’s vehicles on Mr Daniel’s land. [§6]

A five-day trial took place before HHJ Melissa Clarke in November 2024. In her judgment dated 10 December 2024, the Judge found that the Golds had no beneficial interest in the Property and that no Declaration of Trust had been executed. [§9(i)] She found that the Golds had become trespassers after a notice to quit expired on 2 June 2021, and she made a possession order. [§9(vi), §24] However, she did not award damages for trespass from that date. On the financial issues, the Judge found that certain loans had been made by the Golds, including a loan of £121,000 [§9(ii)], but that there was no agreement for them to pay rent (and thus no rent to set off) and no agreement for interest to be paid on the loans, save for two early documented loans. [§9(iii), §9(iv)] She also rejected the claim for a set-off regarding car storage charges, finding no binding agreement due to insufficient evidence of fresh consideration. [§9(v)] Following the hand down of judgment, the Judge heard submissions on costs and ordered that each party pay 50% of the other party’s costs. [§10]

Both parties appealed aspects of the order with the permission of Michael Green J. DFH and Mr Daniel appealed on five grounds, including the costs order. Mr and Mrs Gold cross-appealed on three grounds. The appeals were heard together by Mr Justice Cawson in the High Court. [§2-3]

Costs Issues Before the Court

The costs issue before the High Court was whether HHJ Clarke erred in her exercise of discretion when making the costs order following trial. [§11(v)] The appellants, DFH and Mr Daniel, challenged the order that each party pay 50% of the other’s costs. They argued the Judge incorrectly stated that 50% of the Golds’ costs related to their money claim, failed to have sufficient regard to the Golds’ conduct in the proceedings, and failed to properly reflect the fact that DFH and Mr Daniel had been successful in reducing the amount claimed on the money counterclaim. [§11(v)]

The Parties’ Positions

Mr Thakerar, for DFH and Mr Daniel, submitted that the Judge exercised her discretion incorrectly. He argued that the Judge was wrong to state that 50% of the Golds’ costs had been spent on their money claim, suggesting this was an unsupported estimation. He further contended that the Judge failed to have adequate regard to the conduct of Mr and Mrs Gold during the proceedings and that insufficient weight was given to the success of DFH and Mr Daniel on specific issues, notably in successfully defending the beneficial interest claim and reducing the quantum of the successful money claim. [§60]

Mr Taylor, for Mr and Mrs Gold, would have defended the Judge’s costs order as a proper exercise of her wide discretion. He would have argued that the Judge was entitled to take a broad, percentage-based approach to reflect the mixed outcome of the litigation, where both parties had enjoyed significant successes and failures.

The Court’s Decision

Mr Justice Cawson dismissed the appeal on the costs issue (Ground 5), expressing only a provisional view because there would inevitably be argument regarding the costs of the appeal and cross-appeal and how his decision on the substantive grounds might impact the Judge’s costs order below. [§57] He held that the Judge had a wide margin of appreciation in costs matters and that an appellate court would only interfere where a clear error of principle was established. No such error was identified. [§59]

The court made several key observations in upholding the costs order. Firstly, it rejected the criticism that the Golds’ solicitors had not produced a Statement of Costs at the conclusion of the trial. It noted there is no presumption in favour of summarily assessing costs after a five-day trial, and therefore no expectation for the parties to have produced such statements. [§58]

Secondly, the court emphasised that the Judge had explicitly considered an issue-based costs order as an alternative but rightly concluded that a percentage-based approach was more appropriate in the circumstances. This was a decision well within her discretion. [§59]

Finally, the court found that the Judge had the significant advantage of having presided over the entire trial and seen how the various issues unfolded. She was therefore in the best position to assess the overall success of the parties and the impact of their conduct. [§60] The argument that insufficient weight was given to the appellants’ success on certain issues did not establish a clear error of principle. The court stated it would require “a great deal of persuading” to substitute its own discretion for that of the trial judge and concluded that the 50/50 costs order was one she was entitled to make. [§61-62]

Additional Outcome

It should be noted that whilst the costs appeal was dismissed, the court allowed Ground 2 of the appeal, holding that the Judge had erred in not awarding damages for trespass from 2 June 2021. Mr Justice Cawson awarded damages at a rate of £2,000 per month from June 2021 to the date of judgment (approximately £84,000), and thereafter at the agreed rate of £100 per day. [§29] This substantive success on appeal would inevitably affect the final costs position between the parties.

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