Who Was The Successful Party? | Costs Order Following Mixed Appeal Outcome

Relevant Background

The key events leading up to the judgment were:

• The Claimants brought claims against the Defendant, Taimour Asghar, for harassment, exemplary damages, assault, and costs
• The Recorder dismissed the claims for harassment and exemplary damages, allowed the claim for assault damages of £500, awarded the Claimants 40% of their costs, and dismissed the Defendant’s counterclaim
• The Claimants appealed on 7 grounds, including the claims for harassment and exemplary damages, the level of costs awarded, and whether they should have received indemnity costs
• Permission to appeal was granted on some but not all grounds
• In the appeal judgment, the claims for harassment and exemplary damages failed, but the Claimants succeeded in increasing their costs award from 40% to 80% of costs
• The increased costs award triggered favorable consequences for the Claimants under Part 36 due to an earlier offer they had made.

This judgment dealt with the costs of the appeal.

Issues

The issues to be decided were:

1. What the appropriate costs order should be following the appeal judgment
2. Whether the Claimants or Defendant were the “successful party” overall, given the mixed outcome
3. The specific challenges made by the Defendant to the Claimants’ costs bill

Claimant/Appellant’s Position

The Claimants argued:

• They were the successful party overall, having succeeded on 2 out of 5 grounds appealed
• The Part 36 offer consequences meant they also succeeded on the indemnity costs ground
• The Defendant could have made his own Part 36 offers to protect his position but did not
• Most of the hearing time would have been needed anyway to deal with the costs issues

Defendant/Respondent’s Position

The Defendant argued:

• He was the successful party overall because he succeeded on the 3 most substantial grounds which had the largest financial implications
• The Claimants only succeeded on 2 more minor grounds
• He should pay the Claimants’ costs only for the 2 grounds they succeeded on, with a percentage deduction, from set dates

Decision

The Honourable Mr Justice Spencer determined that the Claimants were the overall successful party in the appeal despite succeeding on only 2 out of 5 grounds.

“In my Judgment, it is clear that the Claimants are the successful party. Had the Defendant wished to protect himself in costs, he could have made Part 36 offers in relation to the claim for assault and the percentage of costs recoverable by the Claimants, so that the only issues on appeal would have been the claims for harassment and exemplary damages, in which case he would have been the successful party. He did not do so, and in consequence the Claimants are the successful party in relation to the Appeal and, in principle, they are entitled to their costs…” [10]

On the issue of the appropriate percentage deduction from costs, following specific albeit relativelty modest reductions on an item by item basis the judge ordered a further 20% deduction to reflect the Claimants’ failure on 2 grounds appealed.

“Balancing these matters, and taking a broad view, in my judgment the appropriate deduction is 20%. That leaves the award for costs in the net sum of £16,774.24 which I round up to £16,775.” [12]

Lastly, in relation to VAT, given that one of the Defendants was registered and one was not, he found:

“Finally, so far as VAT is concerned, one of the Claimants is registered for VAT and one is not. I agree with the Claimants’ submission that the appropriate course is to award VAT on half of the costs allowed, a sum of £1,677.50