Thinc Group Ltd v Kingdom [2013] EWCA Civ 1306

A dispute over costs following litigation concerning recovery of a 'disturbance payment'. Both parties appealed the judge's costs order. The Court of Appeal dismissed both appeals, finding the judge properly exercised his discretion considering the chronology of offers, conduct of parties, and Part 36 offer implications.

Facts

The Claimant (Thinc Group Limited) brought proceedings seeking recovery of £28,530 as a ‘disturbance payment’ made to the Defendant (Jeremy Kingdom). The Defendant made various settlement offers before and during proceedings, including a Calderbank offer of £9,500 in August 2011. The Claimant rejected all offers without explanation. In June 2012, the Claimant made a Part 36 offer of £9,510 inclusive of interest. The Defendant requested clarification of the Claimant’s costs to properly consider this offer, but received no response. At trial, the Claimant was awarded approximately one third of their original claim (£9,510 plus interest of £10,086.68), and the Defendant’s counterclaim was dismissed.

Issues

The central issue concerned the proper allocation of costs following a trial where the Claimant recovered significantly less than claimed, but had made a Part 36 offer that was ‘at least as advantageous’ as the judgment. Both parties claimed to be the ‘successful party’ and both appealed the judge’s costs order which allocated costs to different periods of the litigation.

The Appellant’s Arguments

The Defendant argued the judge was ‘illogical’ in making adverse costs orders against him after the Calderbank offer, given the significance the judge accorded to that offer.

The Respondent’s Arguments

The Claimant argued the judge was unduly influenced by one feature (the monetary value of the Calderbank offer) to the exclusion of other relevant considerations, and that as the successful party it should recover more costs.

Judgment

Lady Justice Macur, delivering the lead judgment with which Lord Justice Ryder and Lady Justice Arden agreed, dismissed both appeals.

The Court found the judge was entitled to identify the Calderbank offer as significant:

“The judge identified the ‘Calderbank offer’ as a significant event and consequently a relevant date in the proceedings. It is hardly surprising he did so in the circumstances of the outcome of this case. In my view he was entitled to give considerable weight to the fact of an entirely realistic offer in monetary terms.”

Regarding the Claimant’s conduct, the Court noted:

“it is the claimant’s ‘robust’ approach to this offer and also the subsequent offer of £16,000 made on 21 September 2011, which I interpret from the context to mean peremptory, dismissive and un co-operative, that is deserving of opprobrium in the assessment of ‘conduct’.”

On the interpretation of CPR 36.14, the Court held:

“The phrase ‘unless it considers it unjust to do so’ in CPR 36.14 (2) and (3) bear the obvious interpretation of ‘unless and to the extent of’.”

The Court emphasised the importance of Part 36 offers:

“A Part 36 offer is a significant factor in any action, requiring the parties to focus upon the issues, appraise expectations and draw back from the fray in order to avoid adverse cost and interest implications and, in so doing, to give due regard to CPR 1.3 and 1.4.”

Implications

This case reinforces several important principles regarding costs. First, a ‘successful party’ does not automatically recover all costs; the court must consider all relevant circumstances including settlement offers and party conduct under CPR 44.3(4). Second, when assessing whether Part 36 consequences would be ‘unjust’, the court may consider the entire litigation history, not merely events from the time the offer was made. Third, parties have an obligation to respond meaningfully to settlement offers and to provide information reasonably requested to enable consideration of such offers. The Court also expressed regret that the parties did not heed judicial encouragement to mediate, noting the unnecessary expenditure incurred by pursuing appeals.

Verdict: Both the appeal and cross-appeal were dismissed. The original costs order made by HHJ Salomonsen was upheld in its entirety.

Source: Thinc Group Ltd v Kingdom [2013] EWCA Civ 1306