High Court Case Addresses Cost Allocation Following Appeal with Focus on Part 36 Offers

Citation: [2024] EWHC 78 (KB)
Judgment on

Introduction

The High Court of Justice in the case of Alamantas Ruzge & Anor v Taimour Asghar [2024] EWHC 78 (KB) addresses nuanced decisions regarding the allocation of costs following an appeal. The Honourable Mr Justice Martin Spencer delivered a judgment that hinged on identifying the successful party for the purpose of cost awards, and how Part 36 Offer can inform the cost consequences.

Key Facts

The claimants, Alamantas Ruzge & Anor, appealed a decision from the Peterborough County Court, which the High Court allowed in part. The appeal was based on seven grounds, with permission granted for five. The successful appeal grounds were an assault claim and an increase in cost recovery from 40% to 80%. A critical element was that the claimants improved upon their Part 36 Offer, which carried implications for indemnity costs.

The legal principles addressed in this case relate to the allocation of costs after an appeal. According to CPR Part 44.2(2)(a), generally, the unsuccessful party is ordered to pay the successful party’s costs. However, a determination had to be made regarding which party was successful. Both parties claimed this status, dependent on their relative successes and failures on individual grounds of appeal.

The judgment also involved the application of the Civil Procedure Rules (CPR) Part 36. This rule encourages parties to settle disputes by allowing a party to make an offer to settle (a “Part 36 Offer”) that can have specific cost consequences if the offer is not accepted and the case goes to trial or appeal.

In assessing costs, the court applied a two-stage inquiry:

  1. Identification of the “successful party” which involved a holistic assessment of both the outcomes on the various grounds of appeal and the overall impact on the parties.
  2. Quantum of costs to be awarded, taking into account any specific costs orders, such as those related to a Part 36 Offer, and appropriate reductions for challenges to detailed claims within the Bill of Costs.

Outcomes

Justice Spencer concluded that the claimants were the successful party. They succeeded on significant issues, including one forming the basis of a Part 36 Offer, which they improved upon. Despite the defendant’s resistance, the ruling factored in the Part 36 Offer to grant indemnity costs from the offer’s expiry date.

Furthermore, the judgment on costs awarded the claimants 80% of the net sum claimed on their Bill of Costs, with certain deductions due to the claimants’ failure on some appeal grounds. However, a rounded-up total sum was eventually awarded, inclusive of VAT on half of the awarded costs due to VAT registration status of the claimants.

Conclusion

The case of Alamantas Ruzge & Anor v Taimour Asghar illustrates the complexities in cost determination following an appeal. The discretion of the court in categorizing the successful party requires a nuanced understanding of success across various grounds of an appeal. It also exemplifies the influence a Part 36 Offer has in cost considerations and the necessity of detailed claims justification within the Bill of Costs. Justice Spencer’s application of both general and specific legal principles led to a succinct resolution of cost allocation, highlighting the strategic use of Part 36 Offers in litigation.

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