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Johnson v Gore Wood & Co, Court of Appeal, 27 January 2004

3 February 2004
The issues

Costs – Part 36 Payments – Payment into Court – an issue based Order for costs.

The facts

The Claimant brought an action against the Defendant firm of Solicitors in respect of borrowings, which he had entered into in reliance on their advice. The Solicitors were found negligent at Trial. However a Payment into Court had been made in 1994, which the Claimant failed to beat. Although the Trial Judge found that the Solicitors had challenged every aspect of the claim, the Claimant had grossly over inflated it. Accordingly, he saw no reason to depart from the basic principle that the Claimant should receive costs to the date of last acceptance of the 1994 payment in and that he should pay the Defendant’s costs thereafter. The Claimant appealed to the Court of Appeal, which concluded on the issue of quantum, that the Trial Judge had been incorrect in his assessment of the losses. On the basis of those findings, the Claimant was then successful insofar as the 1994 Payment into Court was concerned, but failed in respect of a further Payment into Court made in 2001.

The decision

1. The Defendant had argued that in any event damages should have been assessed not at the date of Trial, but as at the 24th August 2001, the date of the second Payment into Court. Since thereafter the Claimant had been out of his money as a result of his own failure to take the monies in Court rather than any default on the part of the Defendant. This was not correct. The fact of a payment in could be used only on an argument as to costs. If the Solicitors had wished to protect themselves by an argument of the sort advanced before the Court of Appeal, they should have made an open offer which the Judge could have taken into account when assessing damages and which could have been done without making any admission of liability.

2. The Claimant should have his costs down to the last date for acceptance of the payment in on 24th August 2001. As to costs thereafter, the Court had to have regard to a CPR 36.20 (and in particular 36.20(ii) “unless it considers it unjust to do so, the Court will order the Claimant to pay any costs incurred by the Defendant after the latest date on which the payment or offer could have been accepted without needing the permission of the Court”). If the ordinary Order was not to follow, the Court had to be satisfied that it was unjust that the Claimant should bear all the costs following the payment in and the onus was on the Claimant to show this. The Claimant had argued that the Trial could have been greatly curtailed if matters, which the Defendants had continued to dispute, had not been disputed – indeed it had been put before the Court that the Trial of 15 days could have been reduced to 3 days. The ratio of the success at Trial to the payment in, in respect of issues argued before the Judge had altered markedly following the Court of Appeal’s decision as to quantum. Taking account of the way in which the Defendants had conducted the Trial, contesting every issue, the right Order would be for the Claimant to pay 50% of the Defendant’s costs as from the last date on which the Payment into Court could have been accepted.

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