HHJ Paul Matthews :
Introduction
- This is my judgment on an appeal brought by Mr Alan Wall, in his capacity of personal representative of the estate of Bryan Wall deceased, against the order of Mr Recorder Norman dated 30 June 2017 (but sealed on 23 August 2017). The order was made in a claim brought by Mr Wall against Mrs Christine Munday, concerning a property bought jointly by the late Mr Bryan Wall and Mrs Munday when they were married to each other. By his order, the judge dismissed Mr Wall's claim, and on a counterclaim by Mrs Munday held that the property belonged beneficially to the estate and Mrs Munday in equal shares absolutely. The judge also made an order for sale and gave certain directions regarding valuation of improvements. He also ordered Mr Wall to pay 80% of Mrs Munday's costs.
- The deceased and the respondent were married in 1969 and divorced in 1974, having had no children. The respondent remarried almost immediately after the divorce became absolute, and the deceased remarried later the same year. In June 1972, during their brief marriage, they sold their original matrimonial home for about £5,400 and bought a leasehold house known as 7 Wellsmoor Gardens, Bromley, Kent for £13,600, with the aid of a mortgage loan of £10,000. The legal estate in the land (ie the long lease) was conveyed to them as joint tenants. The relationship however broke down in 1973, and the respondent left the house and never returned. She commenced divorce proceedings in late 1973. When the parties were divorced, no formal steps were taken to deal with the ownership of the house, still vested in them as joint tenants. But the deceased thereafter treated the house as his own. He insured it, maintained it, and improved it. He left the UK in summer 1974, having meanwhile let it. In 1978 the deceased purchased the freehold of the house. In 1990 he redeemed the mortgage. Tragically, he later developed motor neurone disease and died on 21 March 2015, intestate.
- At the time of the divorce proceedings there was some correspondence between the parties' solicitors regarding a matrimonial settlement. This was gone into at the trial, and the judge concluded that any settlement that there was did not include dealing with the ownership of the house. In May 1989 the respondent's solicitors wrote to the deceased about the possibility of realising her interest in the house, but the matter did not progress. The death of the deceased in March 2015 however changed everything. The parties had been joint tenants, and so by survivorship the respondent became the sole legal owner of the house. The question accordingly was whether she also became the sole beneficial owner or whether the estate of the deceased was entitled to a share, and, if so, what.
These proceedings
- The claim was issued on 24 April 2015 with particulars of claim attached. The primary claim made by the estate was that the informal settlement come to between the parties at the time of the divorce included a sale by the respondent to the deceased of all her interest in the house. (As I have said, at the trial the judge rejected that claim. There is no appeal against that part of his decision.) A defence and counterclaim were served and filed on 3 June 2015, and a reply and defence to counterclaim on 10 July 2015 (amended 15 February 2016). The claim and counterclaim were tried before the judge on 21 and 22 July 2016, and the judge made provisional findings of fact in writing on 21 October 2016. Thereafter submissions on the law were made at a further hearing on 19 and 20 January 2017, and a final judgment was given in writing on 27 February 2017.
- In his judgment, the judge, applying the burden of proof, held that there had been no agreement between the deceased and the respondent for the respondent to sell her interest in the house to the deceased (see the judgment at [50]-[54]). However, the judge held that by reason of the mutual dealings between the parties the beneficial joint tenancy had been severed by the end of 1975 (see the judgment at [71]-[81]). He further recorded that there had been an argument at trial as to whether it was open to the estate on the pleadings to argue that subsequent conduct evidence and intention common to the parties to vary their respective shares (as they have now become) in the property. He had ruled that it was open to the estate so to argue (see the judgment at [61]-[70]). However, having considered the evidence and the arguments, he held that there had been no variation of the parties shares in the property, and that they were therefore still entitled to half each of the beneficial interest (see the judgment at [82]–[85]). There were a number of other matters, largely accounting issues, which were not dealt with in any detail in the judgment and were the subject of further argument and evidence thereafter. Since none of those is challenged, I will not deal with them here, save to underline that the equitable accounting rules that formerly applied in trust of land cases were replaced by ss 12-15 of the Trust of Land and Appointment of Trustees Act 1996: Stack v Dowden [2007] 2 AC 432, [93]-[94]; Murphy v Gooch [2007] EWCA Civ 603.
- As I have said, the form of the order was not however finalised until 30 June 2017. The appellant filed a notice of appeal on 21 July 2017. It sought a variation of the judge's order, so that, instead of the parties having 50% each of the beneficial interest, the appellant estate would have 86% and the respondent 14%. Secondly, it also sought to challenge the judge's costs order, on the basis that the estate, rather than the respondent, had been the successful party overall. It did not seek to challenge the judge's decision (again applying the burden of proof) that there was no agreement between the parties for the respondent to sell her interest to the deceased. Indeed, the appellant does not seek to attack any of the findings of fact by the judge. I record here that no respondent's notice has been filed or served, and the respondent through her counsel confirmed to me that no challenge was made on her behalf to any of the rulings or findings of the judge at trial, including the pleading point referred to in para [5] above and the decision on severance. I gave permission to the appellant to appeal on both the points set out in the appellant's notice on the papers on 17 August 2017. The appeal was heard by me on 11 April 2018, having been authorised by the supervising judge of the Business and Property Courts to do so. Steven Ball appeared for the appellant, and Robert Trevis appeared for the respondent.
Appeals
- I should briefly mention some important but basic rules about appeals. By virtue of CPR rule 52.21(1), an appeal is limited to a review of the decision of the court below, unless the court considers that in the circumstances of a particular appeal it would be in the interests of justice to rehear the case: Audergon v La Baguette Ltd [2002] EWCA Civ 10, [83]. In the present case I conducted a review of the decision below. It was not argued that I should conduct a re-hearing.
- Secondly, rule 52.21(3) provides that the appeal court will allow the appeal where the decision was (a) wrong, or (b) unjust, because of serious procedural or other irregularity in the proceedings below. Here, wrong means wrong in law, wrong in fact, or wrong in the exercise of discretion. As to costs orders, the court cannot interfere unless the judge either (1) erred in principle, or (2) has wrongly included or left out of account some feature to be considered (or not), or (3) went wholly wrong because he did not balance the various factors in the scale: see for example Islam v Ali [2003] EWCA Civ 612, [20], following Lord Woolf in Phonographic Performance Ltd v AEI Rediffusion Music [1999] 1 WLR 1507, 1523. If it is the question of the exercise of discretion, the court can interfere only where it "exceeded that generous ambit within which reasonable disagreement is possible": Tanfern v Cameron McDonald [2000] 1 WLR 1311, [32].
The first challenge: variation of beneficial interests
- As I have already said, the appellant challenges two decisions of the judge at first instance. The first relates to his rejection of the argument that, by their conduct after the divorce, the deceased and the respondent had evinced an intention not only to sever the joint tenancy, but also to vary their beneficial shares in the house from 50-50. The appellant argues that the judge fell into error at paragraphs 82 and 83 of his judgment. But he first referred to paragraph 71.
- That paragraph reads:
"On the facts of Jones v Kernott the court did not need to examine the issue severance discretely from the quantification of shares. This was because upon the court finding that, when the parties' common intention had changed in relation to the property, they intended that Claimant should have the sole benefit of any capital gain in the joint property and the Defendant the sole benefit of any capital gain in his new home, it followed that the joint property was thenceforth owned beneficially in unequal shares and therefore on a tenancy in common. It was not therefore necessary to consider the principles of severance separately nor did the Supreme Court do so. In this case however I see it as my task to consider the principles of severance firstly and then the question of shares."
- Mr Ball does not criticise that paragraph as such. But he says that it shows how the judge was enabled to fall into error in the following paragraphs of his judgment. He says it shows how the judge allowed the question of severance to become detached from the question of variation of the beneficial interests.
- Paragraphs 82 and 83 read as follows:
"82. Jones v Kernott was cited to me extensively. I do not think it necessary to analyse the judgment as extensively in this judgment. Basing myself on Jones v Kernott (and taking account of Barnes v Phillips which was also cited to me) I direct myself (I believe uncontroversially) that I must ask myself (before ever I can address the question as to the quantum of shares) whether there was a common intention to rearrange the beneficial interest in the property. In that enquiry in the absence of direct evidence (of which there is none) I am able to draw inferences from the conduct of the parties which would lead the reasonable observer to conclude that that was the common intention. The conduct must have been conduct observed or observable by the other party and I am to take no account of intentions of one not communicated to the other. In deciding upon the inferences that I draw on this question I take into account the following matters:
82.1. It was clear to both parties that the deceased was undertaking the burden of the mortgage outgoings on the property, its insurance and maintenance:
82.2. It was also clear to both parties (or as regards the defendant readily ascertainable if she did not in fact no) that to enable the deceased to undertake this burden he was managing and letting out a property;
82.3. Despite the deceased undertaking these burdens and receiving the benefits, the legal liability under the mortgage remained throughout a joint liability:
82.4. In theory on a sale of the property the incidence of these burdens and benefits could be adjusted by an accounting exercise:
82.5. There was no mutual conduct or conduct of one party known to the other which pointed to an adjustment of the shares in which the beneficial interest was held.
83. I therefore conclude that I am unable to infer from the conduct of the parties that there was a common intention to rearrange their beneficial interests in the property."
- The appellant says that it is clear from Jones v Kernott that the court should have assessed whether there was a common intention to rearrange beneficial interest in the property by looking at the whole course of conduct from the time of the divorce up to the date of the death of the deceased in 2015. Mr Ball referred me to paragraph 51 of the joint judgment of Lord Walker and Lady Hale in the Supreme Court, the relevant part of which reads as follows:
"In those cases where it is clear either (a) that the parties did not intend joint tenancy at the outset, or (b) had changed their original intention, but it is not possible to ascertain by direct evidence or by inference what their actual intention was as to the shares in which they would own the property,
'the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property': Chadwick LJ in Oxley v Hiscock [2005] Fam 211, [69].
In our judgment, 'the whole course of dealing … in relation to the property' should be given a broad meaning, enabling a similar range of factors to be taken into account as may be relevant to ascertaining the parties' actual intentions."
- But (says Mr Ball) the judge did not expressly say that he was doing this, and the matters which he referred to as having been taken into account were matters before 1990, when the mortgage was paid off. Hence the judge does not appear to have taken into account the 25 years following that. During this time the respondent said and did nothing, and the deceased continued to let out the property, paying the insurance and maintenance. Hence, says the appellant, the judge has made his decision on a false basis. The more so, says the appellant, since it is clear from paragraph 83 of his judgment that the judge has made his decision essentially on the burden of proof (which lay upon the appellant) in the absence of sufficient evidence.
- Mr Ball also criticises the failure of the judge to refer in any more detail to the decision in Barnes v Phillips [2015] EWCA Civ 1056 than the mere mention of its name in paragraph 82 of his judgment. That was a case where a couple bought a property together and it was held on a trust of land. Their financial circumstances changed, and the question was whether the parties had formed a common intention that their beneficial interests would change. The judge held that "using layperson's language" there had been no change of common intention, but nevertheless imputed unequal shares to the two parties. The party with the smaller share appealed on the basis that it was not open to the judge to find that the parties had different shares unless there had been an agreement to change their beneficial interests.
- The Court of Appeal held that there had indeed been an agreement to change the beneficial interests. By using the phrase "using layperson's language", the judge had meant to refer only to an express agreement to change beneficial interests. But, on the facts of the case, there was to be inferred such an agreement. Because there was no basis for an express or inferred agreement as to the shares to be held by the parties after the agreement, the judge had been forced to impute such an agreement to them.
- But that is a very different case from the present. In this case the judge has found, on the basis of the evidence before him, that he cannot infer an agreement to vary the beneficial interests. Unless the appeal court is able to set aside the finding of fact that there is no agreement to vary the beneficial interests, there is no basis for the appeal court to intervene. And, as I have said, Mr Ball did not seek to challenge any of the findings of fact of the court below. For myself, I do not see that the judge's failure to discuss Barnes v Phillips in more detail has any significance. In my judgment, this is not the main point. It is something of a sideshow.
- The appellant further says that the apparent failure of the judge to look at the whole course of dealing when considering the variation of beneficial interests contrasts with the question of accounting, dealt with by the judge in paragraphs [86] – [88] of his judgment. Those paragraphs do refer to matters up to 2015. So the appellant says that the decision is flawed and needs to be taken again. During the argument, the appellant's counsel, Mr Ball, accepted with a suggestion from me that, if the appeal were allowed, perhaps the sensible course would be to remit that question to the judge to take again. Unlike me, the judge would be aware of the totality of the evidence available on the issue. It would therefore be (at least) quicker and more efficient if he dealt with it.
- The appellant also relied on the decision of Malcolm Davis-White QC, sitting as a deputy judge of the High Court, in Montalto v Popat [2016] EWHC 810 (Ch). That was a case where a lengthy, committed, intimate relationship between two businessmen broke up and the court had to decide on the beneficial ownership of a number of assets acquired together. In relation to a flat in Mayfair, the court inferred an original intention to hold the property in equal shares. Whilst the relationship was still continuing, one of the partners paid off the mortgage on the property in a single repayment. The court held that in the circumstances this did not enable the inference of an agreement that the repayer should have an increased share, but rather than he should be repaid that sum when the property came to be sold: it was a loan rather than equity (see at [127]).
- Mr Ball argued that the present case was different, in that the mortgage repayment by the deceased took place long after the divorce. It could not be seen as merely giving rise to a repayment obligation, but instead was the basis for inferring an agreement for a variation of shares. In my judgment, Montalto v Popat does not help very much, if at all. The facts were far removed from those in our case. The Mayfair flat was only one of several assets to be considered. The fact that the repayment there took place during the subsistence of the relationship does not mean that a repayment after the relationship was over must justify a different result. As the deputy judge said there, "context is all". In the present case, the judge was well aware of the redemption of the mortgage by the deceased in 1990, yet still concluded that no variation of beneficial interests was to be inferred. In my judgment, it was a matter of fact finding for him.
The respondent's criticism
- Mr Ball's variation argument was subject to attack by Mr Trevis, counsel for the respondent. The first point was that the appellant had never pleaded a common intention constructive trust or a proprietary estoppel resulting in a variation of the beneficial interests, and that in any event the appellant could not succeed on his argument because there was no detrimental reliance by the appellant in this case. This led to an intervention from Mr Ball pointing out that the judge had dealt with what was essentially a pleading issue in his judgment at paragraphs [64] – [70]. He had ruled that the appellant should be permitted to argue that there had been a variation of the beneficial interests by virtue of a common intention constructive trust or proprietary estoppel. Having read those paragraphs of the judgment again over the short adjournment, I agreed with Mr Ball. The matter had been dealt with by the judge. What is however curious is that the appellant's statements of case do not include any allegation that the deceased had relied to his detriment on any such agreement by conduct that there might be, and neither were there any particulars of such reliance. Nevertheless, the argument had been permitted, and the respondent has not sought to appeal the judge's ruling, which therefore stands. It is too late to argue now that the appellant failed to plead the alleged variation, whether or not he adequately pleaded the relevant elements, and gave appropriate particulars of them.
- A further point of Mr Trevis was founded on the part of the judgment in Jones v Kernott relied upon by Mr Ball. The judges began the citation from paragraph 51 with the words
"In those cases where it is clear either (a) that the parties did not intend joint tenancy at the outset, or (b) had changed their original intention…"
So, before the rest of the citation can apply, it has to be
"clear … that the parties … had changed their original intention".
Yet the reference to looking at the whole course of conduct comes only later:
"that share which the court considers fair having regard to the whole course of dealing between them".
Hence, it was argued that, because it was not clear that the parties had changed their original intention, there was no need for the judge to look at the whole course of conduct between the parties.
- Mr Ball responded by pointing out that, at paragraph 13 of the same joint judgment, Lord Walker and Lady Hale were considering the task of of a claimant seeking to show that the parties intended their beneficial interests to be different from their legal interests, and said that
"if the task is embarked upon, it is to ascertain the parties' common intentions as to what their shares in the property would be, in the light of their whole course of conduct in relation to it…"
For this proposition they cited the speech of Lady Hale in Stack v Dowden [2007] 2 AC 432, HL, at paragraph 60. There, Lady Hale (with whom all their Lordships except Lord Neuberger agreed) had said:
"The law has indeed moved on in response to changing social and economic conditions. The search is to ascertain the parties' shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it."
- In the light of those citations, I do not think it can be said that the process of ascertaining the parties' shared intentions can be different in the several parts of the citation from paragraph 51 of Jones v Kernott already cited. If the original intention, where not the subject of direct evidence, is to be ascertained "in the light of the [parties'] whole course of conduct", and if there is no evidence, direct or indirect, of actual intention as to shares where the original intention has changed, so that "the court considers what is fair having regard to the whole course of dealing between them", there seems to me to be no scope for arguing that the middle part of the process, namely deciding whether or not the parties' original intention has changed, should, in the absence of direct evidence, be done without taking into account the whole course of dealing between them.
- But thirdly Mr Trevis also argued that the judge would have been well aware of what the situation was between the parties after 1990 and until the death of the deceased in 2015. At various places in his judgment, he referred to events which had taken place in that period. At paragraph 5.6, he referred to the "[r]efusal by the [respondent] to cooperate in the sale of the property during the deceased's lifetime". At paragraph 29 he referred to correspondence in 1991 and 1992 concerning the property, and then in paragraphs 30 and 31 to further correspondence just before the deceased's death. At paragraph 59 the judge referred refers to "the quite remarkable lapse of time in the [respondent] enforcing her right…" He argued accordingly that the judge was well aware both of the lapse of time and of the fact that no one did anything about resolving the issue of the title to and beneficial ownership of the house. He also argued that, given the lack of communication between the parties, it would have been impossible for the judge to reach the conclusion that an agreement between the parties to vary their beneficial interests was to be inferred.
Decision
- In my judgment, there is considerable force in this last point made by Mr Trevis. To my mind, the fact that the judge in paragraph 82 refers to matters occurring before the repayment of the mortgage (in particular referring to burdens arising out of the mortgage) does not mean that he did not have in mind both the repayment of the mortgage and what happened between then and the death of the deceased. Indeed, he also refers at 82.5 to there being
"no mutual conduct or conduct of one party known to the other which pointed to an adjustment of the shares in which the beneficial interest was held".
- This is not an inapt way to describe the lack of activity on the part of the respondent and the lack of communication between the deceased and the respondent after the repayment of the mortgage.
- And, after all, although the court in giving judgment must give reasons for its decisions, those reasons must be read on the assumption that the judge knew how to perform the judicial functions on the matters which had to be taken into account: see Piglowska v Piglowski [1999] 1 WLR 1360, 1372, per Lord Hoffmann. Moreover, as that same judge said on an earlier occasion,
'... [S]pecific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance … of which time and language do not permit exact expression, but which may play an important part in the judge's overall evaluation' (Biogen Inc v Medeva Plc [1997] RPC 1, 45, applied recently in Chen v Ng [2017] UKPC 27).
- In my judgment, whilst the judge below might have expressed his judgment on this point in a clearer way, I am far from satisfied that he excluded either the repayment of the mortgage or consideration of the period thereafter as part of the whole course of conduct between the parties in ascertaining whether or not there had been an agreed variation of the beneficial shares in the property, and thereby fell into error. On the contrary, it seems to me that he had well in mind what happened in the whole of that period, and must have taken it into account in reaching his conclusion. Accordingly, I dismiss this part of the appeal.
The second challenge: costs
- The second part of the appeal concerns the costs order which the judge made. He made this following supplementary judgment given ex tempore on 30 June 2017. In that judgment, of which I have seen a transcript approved by the judge, he said this:
"14. The first thing that I have to decide in approaching my discretion under {CPR] Part 44 is who has been the successful party, or whether anybody has been the successful party, and I have been addressed with arguments from both sides which descend to the pleading complexities of the case in order to draw from them logically the consequence on success or otherwise for which they contend. In my judgment, this aspect of the case is much more broadly based. I have to look to see what was it that the claimant was claiming and what was it the defendant was claiming, and then look to see what the result was.
15. The claimant was claiming that he, or the estate, was entitled to the whole of the beneficial interest in the property on account of the deal, for want of a better word, that had been reached in relation to it in 1974. The alternative case that was advanced before me was that if that case failed and therefore we started with a position that the parties, on purchase, were entitled as beneficial joint tenants applying the principles of Jones v Kernott, that there had been a severance. The result of that severance, if severance had been brought about by and the result of it, was an agreement that I should infer from the evidence or from the conduct of the parties to the effect, or impute to the parties to the effect, that a very small part of the beneficial interest resided with the defendant and the great majority of it resided with the estate.
16. The defendant, for her part, was responding to the claim that there was an agreement in 1974 and was asserting that because that claim should fail, that she retained a beneficial interest and she retained a beneficial interest as a beneficial joint tenant. Therefore, by the law of survivorship, she scooped the lot. She failed on that but she defeated the claim of the claimant and the alternative claim, that, even with the agreement being rejected, he was entitled to the lion's share of the proceeds of sale. In my judgment, looked at in that way, there is no doubt as to who was the successful party overall in this litigation. The defendant recovered 50 per cent of the proceeds of sale and the claimant recovered 50 per cent set against the claimant's primary contentions that the claimant was entitled to the whole or to a substantial part of the proceeds of sale. Viewed as a jury question, I conclude that the successful party in this case was the defendant."
- Mr Ball criticises this. He says that the judge has got matters the wrong way round. He says that the position before the litigation was that, the deceased having died, the respondent was by survivorship the absolute legal owner and, subject to any argument about severance, the absolute beneficial owner too. Accordingly, at that stage, if the appellant had done nothing, the respondent would have kept everything, legally and beneficially. The appellant brought the claim for 100% of the beneficial interest, based on an alleged agreement for sale between the parties. But there was also a subsidiary argument that there had been a severance of the beneficial joint tenancy by mutual dealings and a variation in favour of the appellant by subsequent conduct. The appellant failed on the claim for 100 percent by reference to an alleged sale, but succeeded on the claim for a severance and so obtained at least 50 per cent. Accordingly, he had obtained at least half of what he had claimed, whereas the respondent had lost at least half of what she had to start with. On this basis, he could properly be regarded as the successful party for costs purposes.
- Mr Ball referred me to the decision of the Court of Appeal in Day v Day [2006] EWCA Civ 415. In that case, a mother (Lillian) and her son (Phillip) were disputing beneficial ownership of net proceeds of sale of a house that had belonged to Philip's grandmother before her death in 2001. By her will, the grandmother had left the house to Phillip. But the house had been bought from the local authority under the right to buy scheme in about 1985, taking advantage of the 60% discount to which the grandmother was entitled, but otherwise using money provided by Lillian's husband (Phillip's father) John. John had died in 1992. The question after the grandmother's death was whether the money had been a gift to the grandmother, so that Phillip took all the proceeds of sale, or whether there was a trust in favour of John (under whom Lillian now claimed). This trust was argued primarily to be one for John, but subject to the grandmother's right to reside there for the rest of her life. The fallback position was a trust for John and the grandmother in the proportions 40:60 (treating the 60% discount as a contribution to the purchase price).
- At first instance, the judge held that the resulting trust analysis had not been displaced by the evidence, and hence the grandmother had held the property on trust for herself and her son John in shares of 60% and 40% respectively. As to costs, he ordered that Philip should pay Lillian's costs down to the point where the evidence and preparation for trial was complete, but nothing thereafter. Lillian appealed on costs, arguing that she was the successful party, because she had obtained 40% of what she originally asked for, whereas Phillip had lost 40% of what he originally had. So she should have her costs not only down to the completion of trial preparation, but also of the trial itself. The Court of Appeal allowed the appeal on costs.
- Ward LJ (with whom Sir Martin Nourse agreed) said:
"14. The court, as it is now well known, has wide powers, including the power to apportion costs or to make issue-related orders for costs. Our attention has been drawn by both counsel to an unreported case of Johnsey Estates v Secretary of State for the Environment [2001] EWCA Civ 535, a landlord and tenant case where there was a claim, broadly speaking, of about one million pounds, a payment into court of about £200,000 and a judgment for a further £236,000. In his judgment, with which the other members of the court agreed, Chadwick LJ stated the applicable principles to be these (paragraph 21):
'(1) Costs cannot be recovered except under an order of the court; (2) the question whether to make any order as to costs – and, if so, what order – is a matter entrusted to the discretion of the trial judge; (3) the starting point for the exercise of discretion is that costs should follow the event; nevertheless (4) the judge may make different orders for costs in relation to discrete issues – and in particular, should consider doing so where a party has been successful on one issue but unsuccessful on another, and, in that event, may make an order for costs against the party who has been generally successful in the litigation; (5) the judge may deprive a party of costs on an issue on which he has been successful if satisfied that the party has acted unreasonably in relation to that issue; (6) an appellate court should not interfere with the judge's exercise of discretion merely because he takes the view that it would have exercised that discretion differently.'
"22. The last of those principles requires an appellate court to exercise a degree of self-restraint. It must recognise the advantage which the trial judge enjoys as a result of his 'feel' for the case which he has tried. Indeed, as it seems to me, it is not for an appellate court even to consider whether it would have exercised the discretion differently unless it had first reached the conclusion that the judge's exercise of his discretion is flawed. That is to say, that he has erred in principle, taken into account matters which should have been left out of account; left out of account matters which should have been taken into account; or reached a conclusion which was so plainly wrong that it can be described as perverse – see Altrans Express Ltd v CVA Holdings Ltd [1994] 1 WLR 394, per Lord Justice Stephenson at page 400C-F and Lord Justice Griffiths at page 403G-H."
15. The first question, therefore, is whether the judge was correct in characterising the outcome of this litigation as a draw. Mr Margolin contends in effect – these are not his words but mine – that it was a no-score draw in the sense that both parties' main shots at goal missed, and neither managed to score any goal at all. The case therefore petered out as a stale draw because the fallback position was maintained by the judge.
16. We must ask ourselves whether the primary rule applies in this case – the general rule, that is, that the unsuccessful party will ordinarily be ordered to pay the cost of the successful party unless the court thinks otherwise. The question is, which, if any, of these parties did enjoy success in this litigation? We were referred to a judgment of Lightman J in Bank of Credit and Commerce International SA v Ali (no.3) [1999], NLJ 1734 Vol. 149 where he said that:
"For the purposes of the CPR success is not a technical term but a result in real life, and the question as to who has succeeded is a matter for the exercise of common sense."
17. I would go further and say that in a case like this, the question of who is the unsuccessful party can easily be determined by deciding who has to write the cheque at the end of the case; and there is absolutely no doubt at all that the person who has to put his hand in his pocket and pay up the money that is in dispute was Phillip. He failed; his mother succeeded. She succeeded, all the more so, because Phillip adamantly and persistently refused to pay her a penny piece, notwithstanding his fall-back position. So I am in no doubt at all that this case did not end in a draw, but ended in victory for mother. Therefore the ordinary rule should apply, and the judge was correct in applying it to the cut-off point of 14 February; but was, I regret to say, in error in failing to apply it for the costs of the hearing. That hearing was necessary. This unfortunate mother had to pursue her son to the judgment seat in order to recover that which was rightfully found to be hers. There was in my judgment, therefore, a fundamental error of principle in the judge's analysis which itself allows this court to intervene."
- So, too, in this case, Mr Ball says that the appellant had to come to court in order to get the 50 per cent of the property which he has now ended up with. The fact that he failed on other arguments to get himself more than 50% does not mean that he is not the successful party. Indeed, he also made a further recovery out of the proceeds of sale in the accounting exercise. The respondent, on the other hand, has lost more than a half of what she started with. So she is certainly not the successful party.
Decision
- In my judgment, Mr Ball is right. His client, like Lillian in Day v Day, claimed the entire fund, but failed to prove his primary case and was left with his fallback position (severance of joint tenancy) which gave him 50%. Conversely, the respondent, like Phillip in Day v Day, refused to share what she had with the appellant, and the appellant was forced to come to court to get anything at all. And if one asks the question posed by Ward LJ in paragraph 17 of his judgment, "who has to write the cheque at the end of the case?" there is only one answer: the respondent. So the successful party at first instance in this case was the appellant.
- The judge having misunderstood who was the successful party, the appeal court can intervene and make the decision afresh. Here the appellant failed on its primary case, but succeeded on its secondary case of severance, which gave him 50%. He then tried to increase this by arguing that there had been a variation in his favour, but failed on that too. (However, he made further recoveries in the accounting exercise.) Under the rules, if the court decides to make an order about costs at all, the general rule is that the unsuccessful party will pay the costs of the successful party, but the court may make a different order. In this case, it seems to me right and just that the court should make a costs order. So the question is whether costs should follow the event. In principle, in my view they should. The question then is whether there should be a discount from 100 per cent to represent those parts of the case in which the appellant failed. In my judgment there should be. Here the appellant failed on two substantial parts of his case, either of which would have given him the whole or nearly the whole of the beneficial interest. Significant amounts of time and costs were spent on these arguments. In my judgment it is therefore right to discount the costs that the respondent must pay to the appellant by 40 per cent. The appeal on costs is therefore allowed, and I will substitute for the judge's costs order an order for the respondent to pay 60 per cent of the appellant's costs of the hearing below, to be assessed on the standard basis if not agreed.
Conclusion
- The overall conclusion therefore is that the appeal on the first challenge (variation of shares) is dismissed, and the appeal on the second point (costs) is allowed. I will ask counsel to agree a suitable form of order.
