Neale and another v Hutchinson and another
Costs – Dishonesty – Respondents bringing proceedings against appellants to resolve boundary dispute – Judgment given for appellants but costs order made in favour of respondents on grounds of appellants’ dishonesty in course of proceedings – Whether appellants entitled to proportion of costs notwithstanding dishonesty – Appeal allowed
The respondents brought proceedings against the appellants to resolve a dispute over the boundary between the parties’ adjoining residential properties. The respondents relied on a conveyance to the appellants’ predecessors in title in 1936, which they claimed supported their case as to the measurement of the appellants’ frontage. They also claimed that a hedge between the two properties lay on their land. The appellants maintained that the hedge was theirs and counterclaimed for a declaration to that effect, plus damages for disturbance of the hedge. In the early stages of the proceedings, the appellants altered a measurement on an abstract plan and presented the altered version to their expert to reach an opinion on the correct line of the boundary. When the respondents later obtained disclosure of the unaltered plan, the appellants made witness statements alleging that the appellants, not themselves, had been responsible for the forgery.
In the pre-trial stages of the proceedings, the appellants made several offers of settlement. The respondents failed to beat the settlement offers at the subsequent trial. The judge decided the boundary dispute in favour of the appellants and awarded them £250 damages for disturbance of the hedge. However, he found that the appellants had acted dishonestly in the course of defending the claim, by tampering with the plan and alleging that the respondents had been responsible for that tampering. He took the dishonesty into account in his costs order. As a result, he awarded the appellants none of their costs and ordered them to pay certain of the respondents’ costs, including, on an indemnity basis, those occasioned by the appellants tampering with the abstract plan and unreasonably asserting an informal boundary agreement between the parties.
The appellants appealed against the costs order. The central issue was the extent to which the judge’s finding of dishonesty should have influenced his orders as to costs.
Held: The appeal was allowed.
Under CPR 44.3, the starting point on costs was an order in favour of the successful party, although the court could make a different order on assessment of the conduct of both parties. CPR 44.3(5)(a) and (c) contemplated the assessment of misconduct before and during the trial, comprised in the manner in which a party had pursued or defended its case or a particular allegation or issue. However, there was no general rule that a finding of dishonest conduct by the successful party would replace the usual starting point. What was required was an evaluation of the nature and degree of the misconduct, its relevance to, and effect on, the issues arising in the trial, and its tendency to create an unwarranted increase in the costs of the action to either or both of the parties. There was no general principle that a losing party who could establish dishonesty had to receive all its costs of establishing that dishonesty, however disproportionate they might be. Instead, the full range of measures was available to ensure that the dishonest but successful party did not gain, and the honest but unsuccessful party did not lose, in consequence of the wrongdoing established: Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama AS [2009] EWHC 1696; [2010] 5 Costs LR 657 applied.
The respondents had chosen to challenge the correctness of the physical boundary that had existed at the time of their purchase of their property. They had not been influenced in that challenge by any misconduct of the appellants. They had relied solely on the 1936 conveyance and their assertion as to the frontage of the appellants’ property in that conveyance, and had disputed the admissibility of extraneous evidence as to the actual position of the boundary since 1936. The judge had found that they were wrong about those matters. The judge did not seem to have brought into account the fact that, by the time the respondents instituted proceedings, the appellants’ misconduct was entirely isolated from the issue on which the claim was founded. Although the appellants had abused the proceedings in which they were engaged, the grounds on which the claim was brought, and failed, were not infected by that abuse. The starting point should have been an order for costs in the appellants’ favour, subject to adjustments to ensure that they did not recover any costs that might have been incurred in advancing a dishonest case. Those included the costs of pursuing their denial of wrongdoing and their accusation against the respondents in pre-action correspondence and in witness statements, and their making of settlement offers on that basis. They also included court time engaged in advancing the false case. The proper course was to award the appellants only a proportion of their costs on the standard basis. The respondents were ordered to pay 70% of the appellants’ costs of the action, to be subject to a detailed assessment on the standard basis if not agreed.
John Brennan (instructed by Williamson & Soden) appeared for the appellants; Alec McCluskey (instructed by MFG Solicitors LLP) appeared for the respondents.
Sally Dobson, barrister
Costs – Dishonesty – Respondents bringing proceedings against appellants to resolve boundary dispute – Judgment given for appellants but costs order made in favour of respondents on grounds of appellants’ dishonesty in course of proceedings – Whether appellants entitled to proportion of costs notwithstanding dishonesty – Appeal allowedThe respondents brought proceedings against the appellants to resolve a dispute over the boundary between the parties’ adjoining residential properties. The respondents relied on a conveyance to the appellants’ predecessors in title in 1936, which they claimed supported their case as to the measurement of the appellants’ frontage. They also claimed that a hedge between the two properties lay on their land. The appellants maintained that the hedge was theirs and counterclaimed for a declaration to that effect, plus damages for disturbance of the hedge. In the early stages of the proceedings, the appellants altered a measurement on an abstract plan and presented the altered version to their expert to reach an opinion on the correct line of the boundary. When the respondents later obtained disclosure of the unaltered plan, the appellants made witness statements alleging that the appellants, not themselves, had been responsible for the forgery.In the pre-trial stages of the proceedings, the appellants made several offers of settlement. The respondents failed to beat the settlement offers at the subsequent trial. The judge decided the boundary dispute in favour of the appellants and awarded them £250 damages for disturbance of the hedge. However, he found that the appellants had acted dishonestly in the course of defending the claim, by tampering with the plan and alleging that the respondents had been responsible for that tampering. He took the dishonesty into account in his costs order. As a result, he awarded the appellants none of their costs and ordered them to pay certain of the respondents’ costs, including, on an indemnity basis, those occasioned by the appellants tampering with the abstract plan and unreasonably asserting an informal boundary agreement between the parties.The appellants appealed against the costs order. The central issue was the extent to which the judge’s finding of dishonesty should have influenced his orders as to costs.Held: The appeal was allowed.Under CPR 44.3, the starting point on costs was an order in favour of the successful party, although the court could make a different order on assessment of the conduct of both parties. CPR 44.3(5)(a) and (c) contemplated the assessment of misconduct before and during the trial, comprised in the manner in which a party had pursued or defended its case or a particular allegation or issue. However, there was no general rule that a finding of dishonest conduct by the successful party would replace the usual starting point. What was required was an evaluation of the nature and degree of the misconduct, its relevance to, and effect on, the issues arising in the trial, and its tendency to create an unwarranted increase in the costs of the action to either or both of the parties. There was no general principle that a losing party who could establish dishonesty had to receive all its costs of establishing that dishonesty, however disproportionate they might be. Instead, the full range of measures was available to ensure that the dishonest but successful party did not gain, and the honest but unsuccessful party did not lose, in consequence of the wrongdoing established: Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama AS [2009] EWHC 1696; [2010] 5 Costs LR 657 applied.The respondents had chosen to challenge the correctness of the physical boundary that had existed at the time of their purchase of their property. They had not been influenced in that challenge by any misconduct of the appellants. They had relied solely on the 1936 conveyance and their assertion as to the frontage of the appellants’ property in that conveyance, and had disputed the admissibility of extraneous evidence as to the actual position of the boundary since 1936. The judge had found that they were wrong about those matters. The judge did not seem to have brought into account the fact that, by the time the respondents instituted proceedings, the appellants’ misconduct was entirely isolated from the issue on which the claim was founded. Although the appellants had abused the proceedings in which they were engaged, the grounds on which the claim was brought, and failed, were not infected by that abuse. The starting point should have been an order for costs in the appellants’ favour, subject to adjustments to ensure that they did not recover any costs that might have been incurred in advancing a dishonest case. Those included the costs of pursuing their denial of wrongdoing and their accusation against the respondents in pre-action correspondence and in witness statements, and their making of settlement offers on that basis. They also included court time engaged in advancing the false case. The proper course was to award the appellants only a proportion of their costs on the standard basis. The respondents were ordered to pay 70% of the appellants’ costs of the action, to be subject to a detailed assessment on the standard basis if not agreed.John Brennan (instructed by Williamson & Soden) appeared for the appellants; Alec McCluskey (instructed by MFG Solicitors LLP) appeared for the respondents.
Sally Dobson, barrister
