Hutchinson & Penning -v- Neale & Neale [2012] EWCA Civ 345

Posted on Tuesday, March 20th, 2012

H & P had were successful Defendants (‘D’) in a boundary dispute with N & N (‘C’). D had made several offers to settle which were not beaten. However, D had altered a copy plan in the case and when C’s solicitors obtained the original, unaltered document, D produced witness statements accusing C of forgery. It was only under cross-examination at trial that D accepted the true position. However, the forgery did not affect the outcome of the case. The Judge deprived D of any costs and awarded C the costs associated with D’s dishonesty on the indemnity basis. D appealed, arguing that the Judge had incorrectly failed to take as his starting point that a successful party should be entitled to costs under CPR 44.3(2)(a). C argued that the Judge had taken the correct starting point but correctly concluded that D’s dishonesty so infected the action that they should not recover any costs. Having considered the authorities, Pitchford LJ accepted the principles identified by Briggs J in Bank of Tokyo-Mitsubishi UFJ Ltd & Anor -v- Baskan Gida Sanayi Ve Pazarlama AS & Ors [2009] EWHC 1696. There was no general rule that a finding of dishonest conduct would displace the general starting point for an order for costs. The degree, relevance and effect of any misconduct had to be considered. Whilst D had abused the proceedings, the grounds upon which the claim was brought, and failed, were not infected by that abuse. The correct starting point should have been an order for costs in D’s favour subject to adjustments to ensure they received no costs incurred in advancing a dishonest case. C was ordered to pay 70% of D’s costs, save those aspects where C had been awarded costs. Pitchford LJ also ordered that there be no further deductions from D’s costs at detailed assessment on grounds of misconduct.

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