[2024] UKUT 00210 (LC)

As I have said, I received brief further submissions from the parties, following circulation of the draft version of this decision (without this section of the decision) which made reference to the without prejudice save as to costs correspondence.

The relevant correspondence discloses that both parties made offers in respect of costs prior to the Costs Hearing. With one exception, the amounts offered by way of costs were not better, from the point of the view of the offeree, than the outcome pursuant to this decision, which is that the Respondents have to pay the Appellants the total sum of £22,558.42, by way of the Appellants’ FTT Costs and the Appellants’ UT Costs.

The exception is the last of the offers made in advance of the Costs Hearing. This was an offer made by the Respondents, by which they offered to pay the sum of £26,000 to the Appellants. The offer was made by an email sent by the Respondents to the Appellants on 15^th July 2024, at 16:14. Given that the offer was in simple terms, and followed previous offers and counter-offers, it seems to me that the Appellants required only a short time in which to consider and respond to the offer. It seems reasonable to me to treat the Appellants as having been on risk, in relation to this offer, as from and including 16^th July 2024; that is to say the working day prior to the Costs Hearing. Clearly, by this offer (“the Offer”), the Respondents offered a better result that the Appellants have achieved.

The Respondents say that they should have their costs of the Costs Hearing. They point to the Offer. They also make the point that I should take into account the fact that the costs recovered by the Appellants constitute a significant reduction from the total sum claimed by the Appellants. The Respondents point out that the Appellants have recovered only 40.9% of what they claimed, by way of the Appellants’ FTT Costs and the Appellants’ UT Costs. In this context the Respondents have referred me to CPR 47.20, which deals with liability for the costs of detailed assessment proceedings. Sub-paragraph (3)(a) of this provision requires the court, amongst other matters, to have regard to the amount by which the bill of costs has been reduced. CPR 47.20 applies to detailed assessment proceedings. The Costs Hearing was not part of detailed assessment proceedings, but I accept the principle that, in considering the costs of the Costs Hearing I am entitled to take into account all the relevant circumstances, including the significant reduction achieved by the Respondents in the Appellants’ recoverable costs.

Applying that approach, there seem to me to be competing factors.

First, there is the Offer. 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 16^th July 2024. The Appellants are entitled to their costs of the Costs Hearing, up to and including 15^th 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 16^th 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 16^th 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 12^th July 2024.

Second, 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.

Third, and while I regard this point as having rather less force, 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.

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.

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.

Mr Hale requested a period of 21 days for payment of the costs which the Respondents are required to pay to the Appellants. This was not opposed by the Appellants. I therefore allow a period of 21 days for the Respondents to pay the costs which they are required to pay to the Appellants. The period of 21 days will run from the date of my order for payment of these costs.