Costs – Allocation – Conduct – Multi-track – Small claims

David Peakman v Linbrooke Services Ltd: CA (Civ Div) (Lords Justice Mummery, Goldring, Lady Justice Smith): 13 November 2008

The appellant (P) appealed against a decision to make no order for costs.

P was a self-employed cable jointer. The respondent (L) retained P to carry out work for it. L was doing the work for another company (T). P’s claim against L was for work done, the costs of diesel fuel, damages for summarily terminating his contract without reasonable notice and for the cost of replacing tools that had gone missing. His total claim was for £2,232.40. L contested all the claims. It claimed that the work done by P was of poor quality and that he had repudiated his contract, alternatively it was terminable at will. L counterclaimed for the costs of remedial work required to rectify P’s defective work in the sum of £3,019.44. L also counterclaimed for loss of profits because it had allegedly lost contracts with T as a result of P’s work, the loss on a single contract being said to be more than £30,000. P succeeded in his claim for work done, for the reimbursement of his fuel costs and in respect of his tools, subject to a reduction of 25%. The judge awarded P £1,145. L recovered 50% of its claim for defective work in the sum of £1,410 and interest. The judgments were to be satisfied by the payment of £265 plus interest by P to L. The judge made no order as to costs. P submitted that the counterclaim in respect of lost profit on contracts with T was hopeless from the beginning and should never have been advanced, the existence of the T counterclaim meant that the case was allocated to the multi-track rather than the small claims track and that should have been reflected in the judge’s costs decision.

Held: (1) The judge was right to find, as far as the claim and basic counterclaim were concerned, that there was no winner for the purposes of rule 44.3(2)(a) of the Civil Procedure Rules (CPR). P succeeded in respect of part of his claim. His claim that any defective work was not his fault failed, as did a claim for loss of future work. L succeeded in its claim regarding defective workmanship, although not to the full extent of its claim. P had to pay an insignificant sum to L.

(2) The T counterclaim was hopeless as was clear both from the trial documents and what the judge said about it in his judgment. It was clear that there was never any evidential basis for the T counterclaim. That was so when the case was assigned to the multi-track. The further information ultimately provided underlined that. Yet even on the first day of the trial L sought to keep the issue in play. The T counterclaim should never have been brought. It should in any event have been abandoned long before trial.

(3) By rule 44.3(4)(a) of the CPR the court was obliged to have regard to all the circumstances including the conduct of the parties. It was inconceivable that, absent the T counterclaim, the case would have been in the multi-track. It would have amounted to a straightforward case involving at most a little over £3,000, in which P might have represented himself. The normal track for such a claim would have been the small claims track. The complexity of the case would not have dictated the multi-track. Therefore L’s conduct had resulted in P incurring substantially more costs than would otherwise have been the case and the judge was plainly wrong in not taking that into account as a relevant factor in exercising his discretion as to costs. His order would be set aside. The right order was for L to pay 50% of P’s costs from the date of allocation to the multi-track.

Appeal allowed.

Judith Ayling (instructed by Punch Robson) for the appellant; William Moffett (instructed by Irwin Mitchell) for the respondent.