Summary

A party who agreed to mediation but then took an unreasonable position in the mediation was in the same position as a party who unreasonably refused to mediate. Where the claimants had won on liability and had recovered substantial damages, but the defendants succeeded in cutting down the sum awarded to a fraction of what was claimed, the claimants should not have the whole of the balance of their costs and something should be deducted to reflect the fact that they claimed so much more than they recovered.

Facts

The court had to determine costs arising out of an action by the claimant landowners (C) against the defendant surveyors (S) alleging negligence in connection with leases of land used by Bournemouth International Airport as a car park. The court found that S had been negligent in respect of a 2002 lease, which superseded a 2000 lease, and in respect of a 2003 lease of further land which followed the terms of the 2002 lease. The court held that S should have negotiated leases in 2002 and 2003 which contained "turnover" rent provisions with a split of net car park income of 10 per cent to C. The damages in respect of the 2002 lease were £773,479, and in respect of the 2003 lease were £141,660, making a total of £915,139. Those damages were assessed on a loss of capital value basis rather than on a loss of income basis. The sum which was claimed at trial had been up to £87.8 million on the basis that the income split should have been 93.4 per cent to C. The court further held that the car parks would not in due course have been built over with decking, thus increasing their capacity, and that no claim could be made for loss on that basis. Claims against the solicitors (W) who acted for the estate in connection with the leases and who were brought into the action by S were dismissed and W were awarded their costs on an indemnity basis. C argued that they stood in the position of winners and should accordingly have the costs of the action subject possibly to an order to reflect the fact that they had lost on various discrete issues. S submitted that C were not to be treated as winners because they were awarded damages which were but a small proportion of their claim; C had exaggerated their claim, which made mediation impossible; S were entitled to their costs of a number of discrete issues on which C had lost; there should be no order as to costs in relation to the balance of the costs; C had failed to comply with the professional negligence pre-action protocol; S had made offers to C to settle.

Held

The decision to join W was a tactical one, and no proper consideration had been given to whether there was any sufficient basis for making a claim against W: if it had been properly considered, it would have been realised that there was not. S should bear the consequences of their conduct and C should not. S's costs payable to W should not be reimbursed by C, and C should not have to pay S's own costs incurred against W. (2) Some £240,000 of S's total unassessed costs of £1.6 million related to issues, including the decking issue, which should be paid by C. That was 15 per cent. The £1.6 million included costs incurred in advancing the claim against W. Accordingly C would be ordered to pay S 15 per cent of their costs as determined on detailed assessment if not agreed, and should not recover 15 per cent of their own costs as determined on detailed assessment if not agreed. (3) The court was satisfied that C intended to comply with the pre-action protocol and rejected the submission that there was conduct which should be reflected in the orders for costs. (4) Neither side's stance in negotiations was reasonable. Where the failure to mediate was due to the attitudes taken on either side, it was not open to one party, in the instant case S, to claim that the failure should be taken into account in the order as to costs. C's position at the mediation was plainly unrealistic and unreasonable. A party who agreed to mediation but then took an unreasonable position in the mediation was in the same position as a party who unreasonably refused to mediate. That was something which the court could and should take account of in the costs order, Halsey v Milton Keynes General NHS Trust (2004) EWCA Civ 576, (2004) 1 WLR 3002 applied. In the circumstances S's offers should not be taken into account on costs. C had won on liability and had recovered substantial damages, but S succeeded in cutting down the sum awarded to a fraction of what C were asking for. In the circumstances C should not have the whole of the balance of their costs. Something should be deducted to reflect the fact that they claimed so much more than they recovered. C were awarded only 70 per cent of the balance of their liability costs, with the result that they would get 59.5 per cent of their costs incurred against S in connection with liability as assessed or agreed. C were awarded only 80 per cent of the balance of their costs on damages, with the result that they would get 68 per cent of their costs incurred in connection with damages as assessed or agreed.