Agreeing costs against one Defendant but not the other

Oberholster v Little & Anor [2020] EWHC 2635 (QB) (06 October 2020)

Background

C contracted with D2 (Optical Express) to undertake ophthalmic surgery. The surgery was carried out by D8 (Dr Oberholster), a surgeon engaged by D2.

D2 was sued along with other Optical Express companies who were included due to the uncertainty as to which company had contracted with C.

D2 and D8 denied liability. The C made an offer shortly before trial to all Defendants. D2 accepted the offer. Therefore, the claims against the other Optical Express companies were discontinued without any orders for costs.

Costs Decision

C and D8 could not agree liability for costs. C applied for the costs between C and D8 to be determined by the Court. D8 applied for their costs of defending the claim to be paid by C or D2.

At first instance, these applications were dismissed against D8 who was ordered to pay C’s costs of proceedings against them. The Judge said that the claims were inextricably linked and that C was justified in pursuing all Ds. D8 could pursue Part 20 proceedings against D2 if it so wished. The Judge summarised the position where the substantive issue between the parties had fallen away:

"There are numerous authorities relating to situations where substantive issue between the parties has fallen away but costs remain in issue, with different approaches taken. In Hanspaul and another v Ward and others [2016] EWHC 1358 (Ch) the Court considered various authorities on the point, including Brawley v Marczynski which approved the principles laid down in R. (on the application of Boxall) v Waltham Forest LBC regarding the determination of liability for costs where a claim has settled without admission of liability and without agreement as to costs, which were summarised as:

1) The court has power to make a costs order when the substantive proceedings have been resolved without a trial but the parties have not agreed about costs.

2) The overriding objective is to do justice between the parties without incurring unnecessary court time and consequently additional cost.

3) At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion. In between the position will, in differing degrees be less clear. How far the court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.

4) In the absence of a good reason to make any other order the fall back is to make no order as to costs."

The Appeal

D8 appealed. D8 asserted that C should pay its costs of defending the action and should then seek them from D2 as part of C’s costs (a Bullock order). Alternatively, D8 sought an order requiring D2 to pay its costs (a Sanderson order), or no order as to costs between C and D8.

Mr Justice Freedman, on appeal, said:

“38. In my judgment, the Court was not adjudicating as to which party had won or resolving disputed points of fact. It was doing that which was permissible on a determination of costs without a trial, namely applying a broad-brush approach. This led not to a decision that D8 was bound to lose if the case were contested, but that there were such significant difficulties in his case that justice was done by an order for costs against it. By electing the summary process rather than a trial of the issues for the purpose of costs, the parties took upon themselves the risk that the broad-brush approach may not be as good to each of them respectively as a decision after a trial.

43. In my judgment, the Judge was not wrong in embarking on the summary process, given that he had the consent of the parties: see BCT Software Solutions Ltd v C. Brewer & Sons Ltd. at para. 18(2) above. He did not have to do so, but he did so. Given that he had the consent of C and D8, they could not complain that he dealt with the matter summarily. The Judge relied on material available to him in the summary process, he took into account matters which were appropriate, he drew on points from agreed evidence to reach a reasoned conclusion which was available to him. He did not have to decide disputed points of fact, and he did not do so.

45. It therefore follows that it was not wrong for the Judge to reach the conclusion that the claims against D2 and D8 were inextricably bound up or linked and that it was difficult to see how the two could not stand or fall together. The acceptance by D2 of the Part 36 offer did appear to indicate a lack of conviction in D2's case, albeit that this was not necessarily the case and the acceptance of the offer was without admission of liability. Nevertheless, the acceptance was enough in a summary process to indicate that D2's case, if it went to trial, was likely to fail, in which case without convincing evidence that D8 procured the consent himself, it indicated that D8 too would fail. There was no convincing evidence that D8 procured the consent because his main defence was that he relied on D2 to procure the consent. The reasoning of the Judge, and the quotation from Mr Rimmer's skeleton argument is a tenable way of looking at this matter on a summary process and was well within the broad range of reasonable responses available to the Judge.

46. The matter has been expressed succinctly by D2 in the following terms, which I adopt: "On Ground 1, to the extent that it touches on the Second Defendant, the Judge's decision was manifestly one within the very broad costs discretion open to him in these circumstances. The Eighth Defendant's appeal is an attempt to re-argue the merits of the applications; it does not disclose any error of law or serious procedural irregularity such that the Judge's decision should be overturned."

64. At highest, there are alternative ways of looking at the matter which would have been available to the Judge, and which a different Judge might or might not have adopted. That is not a sufficient basis to overturn or vary the decisions below. The decisions of the Judge were well within the generous ambit of discretion available to a Judge deciding costs issues, and a fortiori where the decision is about broad-brush costs issues which the parties have entrusted to the Court to decide without requiring a trial. As set out above, the decisions in this case were reasoned and justifiable. There were no errors of principle. D8 has been unable to identify any respect in which the Judge was wrong. It follows that the appeal will be dismissed.

The appeal was therefore dismissed and D8 was required to pay C’s costs of proceeding against them.

Readers may also wish to consider Jabang v Wadman & Ors [2017] EWHC 1993 (QB) (31 July 2017). Briefly, C succeeded against D2 but was unsuccessful against D3-5. D2 was ordered to pay all of C’s costs. C was ordered to pay the costs of D3-5, but D2 was to indemnify C for his liability to D3-5.