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Home > Judgments > 2012 archive

Thomas v Jeffrey and Others [2012] EWCA Civ 693

Appeal against a costs order in proceedings under the Inheritance (Provision for Family and Dependants) Act 1975. Appeal allowed.

The claimant was the son of the deceased. The defendants were the executors of the estate and the residuary beneficiary of the will. At the conclusion of a trial of the claimant's claim under the Inheritance (Provision for Family and Dependants) Act 1975 the Recorder had found that the disposition of the deceased's estate as effected by his will was not such as to make reasonable financial provision for the maintenance of the claimant, and that it would be just to order a payment to the claimant out of the estate of a lump sum of £36,475. Following consequential argument as to costs, he ordered the executors to pay the claimant's costs of the claim out of the estate on the standard basis.

The defendants appealed the costs order to HHJ McCahill QC, sitting as a judge of the Chancery Division. They argued that, far from awarding costs to the claimant, the only correct costs order to make in the circumstances was that the claimant should pay the entirety of their costs of their unsuccessful defence of the claim.

The defendants' argument was founded on the claimant's alleged deficiencies in the conduct of the claim: (i) a failure to set out his case adequately or at all; (ii) a failure to disclose relevant documents; and (iii) the failure to join the residuary beneficiary as a defendant (she was only joined at a late stage).

The claimant's case had been stated as being for half of the deceased's estate, some £100,000. However during the trial alternative submissions were made that he should be awarded a sum for the purchase of a 2 bedroom flat, or what the Recorder described as the more down to earth option of an order clearing his debts. The level of the indebtedness was not disclosed until the trial itself. The Recorder's order had been designed to allow the claimant simply to clear his debts. The defendants' main point (as later characterised by Rimer LJ) was that the making by the claimant of his late disclosure of the details of his indebtedness put such a different complexion on the case that it reflected conduct by the claimant that did not just undermine his claim to recover costs, it showed that he should pay them. They argued that had the disclosure been made earlier, they would or might have made an offer that would or might have disposed of the proceedings, or that they would or might have conducted the litigation differently. On this point the defendants relied on the Court of Appeal authority of Ford v. GKR Construction [2000] 1 WLR 1397.

The defendants' appeal succeeded and Judge McCahill ordered Mr Thomas to pay the defendants' costs both of the claim and of the appeal.

The claimant appealed to the Court of Appeal.

Rimer LJ quoted from Judge LJ in Ford at 1400H, where he stated:

'Whatever the starting point, or even what can be described as the "normal rule" when faced with a payment into court which exceeds the award of damages, the judge reaching his decision about costs is required to take into account all relevant aspects of the litigation. This includes late disclosure, late service of evidence or the development of unanticipated contentions and the stage in the litigation when these events have occurred, their nature and their effect on the outcome.

Civil litigation is now developing into a system designed to enable the parties involved to know where they stand in reality at the earliest possible stage, and at the lowest practicable cost, so that they can make informed decisions about their prospects and the sensible conduct of the case. Among other factors the judge exercising his discretion about costs should consider is whether one side or the other has, or has not, conducted litigation with those principles in mind. That is what Judge Gaskell did here and he was right to do so.'

Rimer LJ held that the principle of Ford is no more than "a reminder that the discharge of the discretionary jurisdiction that a judge is called upon to exercise when making a decision as to costs requires him to take account of 'all relevant aspects of the litigation.'" (para 30).

In light of this, Rimer LJ concluded that the Recorder was fully entitled to conclude that he could not be satisfied that, had the disclosure been made earlier, it would have made any difference to the defendants' apparently uncompromising attitude towards the claim. Moreover, although the Recorder did not himself make this point, Rimer LJ regarded it as far from clear that, had the late disclosure not been made, the claim would have failed.

Rimer LJ therefore allowed the second appeal and restored the Recorder's costs order.

Summary by Thomas Dudley, barrister, 1 Garden Court
__________________________

Neutral Citation Number: [2012] EWCA Civ 693
Case No: A/2011/1728
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY
His Honour Judge McCahill QC
Case No: 0CH00010


Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 31/05/2012
Before :

LORD JUSTICE LAWS
LORD JUSTICE RIMER
and
LORD JUSTICE PATTEN
- - - - - - - - - - - - - - - - - - - - -
Between :

RICHARD PAUL THOMAS Appellant
- and - 
(1) DAVID JEFFERY
(2) JOY SWEET
(3) GEMMA SWEET Respondents

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Mr Anthony Trace QC and Mr Laurie Scher (instructed by Kelsall & Company) for the Appellant
Mr Alex Troup (instructed by Stephens & Scown) for the Respondents

Hearing date: 27 April 2012
- - - - - - - - - - - - - - - - - - - - -
Judgment
 
Lord Justice Rimer :
Introduction
1. This is a second appeal against an order made by His Honour Judge McCahill QC on 8 June 2011, as amended on 23 August 2011. Judge McCahill was sitting as a judge of the Chancery Division, Bristol District Registry, on an appeal for which he had given permission, against a costs order made by Mr Recorder Wood on 5 April 2011 following the trial of a claim by Richard Paul Thomas under the Inheritance (Provision for Family and Dependants) Act 1975. The first and second defendants to the claim were David Jeffery (an accountant and sole principal in the firm of David Jeffery & Co) and Joy Sweet, the executors of the will of the deceased; and the third defendant was Gemma Sweet (Joy Sweet's daughter), the residuary beneficiary under the will. The deceased was the late Raymond Spry, who was Mr Thomas's late father (Thomas was a deed poll name change).

2. The claim was tried over 13, 14 and 15 December 2010, following which the Recorder produced a conspicuously careful, thorough and thoughtful reserved judgment by which he explained his conclusion (i) that the disposition of the deceased's estate as effected by his will was not such as to make reasonable financial provision for the maintenance of Mr Thomas, and (ii) that it would be just to order a payment to Mr Thomas out of the estate of a lump sum of £36,475. Following the consequential argument as to costs, he gave short extempore reasons for ordering the executors to pay Mr Thomas's costs of the claim out of the estate on the standard basis, although he disallowed Mr Thomas also to recover any 'additional liability' within the meaning of CPR Part 44.3(B)(1)(c), a point not alive before us.

3. Whilst the defendants did not challenge the Recorder's disposition of the substantive claim, they did by their appeal before Judge McCahill challenge his costs order. They argued that, far from awarding costs to Mr Thomas, the only correct costs order to make in the circumstances was that Mr Thomas should pay the entirety of their costs of their unsuccessful defence of the claim. At first blush that might seem to be a bold line to take, not least because the defendants had never even made an offer to settle the case (or none of which the court could be informed in considering the appropriate costs order). Bold or not, the appeal succeeded and Judge McCahill ordered Mr Thomas to pay the defendants' costs both of the claim and of the appeal.

4. Mr Thomas now challenges that conclusion, with the permission of Gross LJ who, on paper, expressed the view that it was strongly arguable that Judge McCahill was wrong to interfere with the Recorder's costs order and that his substitute ruling did not do justice between the parties. On the appeal, Mr Trace QC and Mr Scher (neither of whom appeared below) represented Mr Thomas; and Mr Troup, who appeared both at the trial and appeal below, represented the respondents.

5. At the conclusion of the argument, the court announced that it would allow Mr Thomas's appeal and restore the Recorder's costs order, for reasons to be given later in writing. These are my reasons for concurring in allowing the appeal. At the request of counsel, the court deferred making any order until after counsel had had the opportunity to consider our reasons and to make appropriate submissions in writing.

The background facts
6. It is not necessary to explain it in close detail, but I should set out an outline of the story. The deceased was born on 12 December 1932 and was first married to Sylvia, by whom he had a daughter, Heather. Mr Thomas (whom I shall call 'Richard') was born on 24 November 1973 and was the child of the deceased and his second wife, Barbara, who had married on 12 January 1972. Richard's half-sister, Heather, played no material part in the story.

7. In the 1970s, when the deceased was in his forties, he and Barbara bought Rosemellyn Farm, near Roche, comprising a farmhouse, milking parlour, covered yard and over 104 acres of land. Richard was then about four. In about 1979 the deceased sold the farmhouse, milking parlour and yard and ended up in a caravan on the unsold land. In 1984 he obtained planning permission to build a bungalow on the land and started to build it in 1987 with Richard's help, who was then about 13. All three then lived in it. At about the same time, most of the land was also sold save for about 35 acres. The Recorder found that Richard did at least some work on the farm while he was at school. In about 1989 Richard left school and undertook a three-year apprenticeship with Cornwall Farmers, during which he also undertook an engineering course.

8. Richard's parents separated in 1991 and a decree nisi of divorce was pronounced on 15 January 1992. On attaining the age of 18 on 24 November 1991, Richard became entitled to an inheritance of £4,500 left to him by Barbara's father. The deceased needed to make provision of some £17,000 for Barbara on the divorce and he asked Richard to contribute his £4,500 towards it. Richard refused and the deceased had to sell cattle instead. This upset him and a rift developed between father and son. Whether this was the sole or main cause is unclear, the Recorder saying, in paragraph 19, '[o]ther possible causes of such a rift are contended for, and the facts are disputed. At all events, there certainly was such a rift'. In 1992, when Richard was 19, he moved out of the bungalow and into a flat in Roche, which he shared with a girlfriend.

9. At about the time of the separation, the deceased became friendly with a Mrs Fahey. She is the mother of Joy Sweet (the executrix, and second defendant), who is the mother of Gemma Sweet (the deceased's residuary beneficiary, and third defendant, whom I shall call 'Gemma').

10. On 24 October 1995 the deceased, aged 62, made a will wholly in favour of Mrs Fahey, also appointing her his sole executrix. Gemma was then aged eight. In that will the deceased said that he had deliberately not left anything to Richard 'due to the trouble that he has caused me' or to Heather as 'she has not acknowledged me for a number of years'.

11. In 1996 the deceased, preparing for retirement, sold 18 of the 35 acres and in 1998 he sold the rest of his land and his bungalow. He moved in with Mrs Fahey. Richard changed his surname to Thomas by deed poll on 15 May 1998. The deceased's new living arrangements did not work and in July 2000 he bought a bungalow in St Austell where he lived until shortly before his death. His bungalow was barely half a mile from where Mrs Fahey lived and they continued to see each other every day.

12. At some point, as the Recorder found, the deceased 'took a shine' to Gemma and by his last will of 17 January 2003 he named her as his residuary beneficiary. In that will he said that he had not mentioned his two children 'as I was not happy with their attitude towards me during my lifetime'.

13. The deceased died on 18 April 2008. Mr Jeffery and Mrs Sweet, the two executors, duly proved it. His net estate was £229,000, the main asset being the St Austell bungalow, estimated to be worth some £200,000. The balance of the net estate was represented by cash of some £23,595 and chattels worth about £7,000.

14. Richard, now 38, lives in rented accommodation in North Devon with his girlfriend, Sarah-Jane Tanton, now 28. The Recorder described him as apparently having considerable business acumen and potential as a self-employed motor mechanic. He described Gemma, now 24, as well educated, living with her parents at moderate expense and looking for work to exploit what was also, in his judgment, her considerable potential.

15. Following the deceased's death, Richard's solicitors wrote on 15 January 2009 to the two executors, and indicated Richard's intention to make a claim under the 1975 Act. Upon inquiry by Mr Jeffery as to the 'precise nature' of the claim, Richard's solicitor replied, on 3 March 2009:

'Our client has a claim under [the 1975 Act], and in addition has a claim by virtue of the doctrine of proprietary estoppel. We would put the value of our client's share in his father's estate as 50% of the net value of the estate'.

Richard commenced his claim under the 1975 Act in December 2009.

16. Richard made a witness statement in support of his claim in December 2009. His case rested importantly on his claim that he had spent a material part of his childhood working on the deceased's farm, as he had continued to do at weekends even after leaving home when he was 19. He said that the deceased assured him that the farm would all be his one day. He recognised that, once his father retired and sold the farm, he was not going to inherit it but he claimed that his expectations were still that he would inherit the deceased's estate as he felt he had contributed to a successful farm. He advanced the case that Mrs Fahey was endeavouring to cause a rift between him and the deceased and he claimed that, whatever difficulties there had been at the time of his parents' divorce, he and his father were subsequently reconciled. He could not, therefore, understand his comment about him in his last will.

17. Richard said relatively little about his own financial circumstances in his witness statement. He said, in paragraph 9:

'I have no savings and can only afford to rent a house with my girlfriend – at £500 per month. My other outgoings are Council Tax £80 pcm; food £160 pcm; gas/electricity £55 pcm; water rates £50 pcm; TV licence £11 pcm. I pay £270 towards a hire purchase agreement on a motor bike, a credit card payment of £12 and £50 on clothes every month. I pay no maintenance to my former wife and nine year old son – although I do see him every other weekend. My income is £1,000 per month, and I have previously stated I am a self-employed motor mechanic and have been from the 20th of August 2009.'

Those figures disclosed an excess of monthly expenditure over income and reflected the existence of hire purchase and credit card debts.

The Recorder's conclusions
18. The Recorder directed himself, correctly, that Richard's claim posed for him a two-stage inquiry. Stage 1 required him to decide whether or not the disposition of the deceased's estate effected by his last will made reasonable provision for Richard's maintenance. If he decided stage 1 in Richard's favour, stage 2 required him to decide what order to make so as to provide such provision: see sections 2 and 3 of the 1975 Act, including in particular section 3(5), which requires the court to take into account the facts as known to the court at the date of the hearing.

19. The Recorder addressed himself to the stage 1 question between paragraphs 21 and 38, in which he carefully set out the rival cases and summarised the evidence in support of each. The defendants' case appears to have been directed not just to challenging Richard's account but also to blackening his name in a variety of ways. After summarising his findings, the Recorder expressed his prima facie inclination as being that the lack of any provision for Richard in the deceased's will was unreasonable, but before coming to his final finding on that he went through the checklist in section 3(1) of the 1975 Act in order to 'make sure that this view is in balance'. His ultimate conclusion, as explained in paragraphs 37 and 38, was that the failure of the deceased's will to make any provision for Richard's maintenance was unreasonable.

20. The Recorder moved on to consider stage 2 of the inquiry. He opened by directing himself that the language of section 3 showed that a stage 1 answer in favour of the claimant did not necessarily also require the making of a stage 2 award in his favour, but he said that there could be no justification for not making provision for Richard in this case. It was not in dispute that Richard was capable of earning a living and so maintaining himself and the main focus of Richard's case was on his need for housing. Richard's counsel stressed that Richard had no property and was over £36,470 in debt. The latter figure, or more accurately its emergence at the trial, was of significance in the subsequent argument about costs. No such figure was identified in Richard's original witness statement of December 2009. In paragraph 43 of his judgment, however, the Recorder explained how, at the end of the first day of the hearing, he had only the sketchiest picture of Richard's financial circumstances and he 'dictated a list of categories of disclosure which ought to have been forthcoming well in advance of the trial and which was now required'. That did not yield anything additional to do with Richard's current housing arrangements, under which he and Miss Tanton occupied part of a farmhouse that they rented from her stepfather for £500 a month in cash (the figure given in Richard's witness statement). In particular, no tenancy agreement was produced, nor was a bank statement showing such payments, but the Recorder accepted that Miss Tanton had no long term expectations of receiving any part of the farm (her stepfather had two daughters). The Recorder accepted Miss Tanton's evidence that 'it would be nice to have a two-bedroomed place of their own'.

21. It remained Richard's case that reasonable financial provision for him was in the order of about £100,000, or in the order of about half the net estate (50% of the net estate is what Richard had stated at the outset was his claim). The Recorder also, however, pointed out in his conclusions, at paragraph 47, that the alternative submissions were (i) for an order facilitating the purchase of a two-bedroom flat, and (ii) what the Recorder called the 'more down-to-earth alternative that I should consider the debts'. That was a reference to the debts proved by the late disclosure during the trial that the Recorder had ordered of his own motion. The Recorder's ultimate conclusion was that the reasonable provision to make for Richard was to order, by way of maintenance, a lump sum of £36,475 (a rounded up figure for the debts), which is what he did.

The Recorder's costs order
22. We have a transcript of the proceedings in which the question of costs was argued. Richard was claiming that his costs should be paid by the executors out of the estate. The defendants were claiming that their costs of the trial should come out of the estate, but (as the Recorder understood it) that Richard should pay the defendants' costs up to the start of the final preparations for trial. The defendants' argument was founded on Richard's alleged deficiencies in the conduct of the claim: (i) a failure to set out his case adequately or at all; (ii) a failure to disclose relevant documents; and (iii) the failure to join Gemma as a defendant (she was only joined at a late stage). It is worth noting that we were not told of any complaint by the defendants during the run up to the trial of any failure by Richard to make proper disclosure, let alone of the making by the defendants of any request or application for further disclosure. The disclosure made during the trial that produced the detail of Richard's debts was as a result of the Recorder's order made of his own motion. As for the failure to join Gemma as a defendant at the outset, that was no doubt a mistake but it was obvious that she was a necessary party and so the defendants could and should themselves have ensured her joinder at an early stage.

23. In ruling on costs the Recorder referred to the letter from Richard's solicitors of 3 March 2009, in which they put his claim at 50% of the net value of the estate 9 (see [15] above). He continued:

'7. Now it is right to say that that is the basis on which the claim is put and was maintained as a basis which the claimant put it right up to the trial. Mr Guy [counsel for Richard], who I think was not earlier involved, rightly disowned any suggestion as to proprietary estoppel but there was a claim for 50% of the estate nevertheless and it was put on two bases which were alternatives. First, though it might be necessary reasonably to house [Richard], the claimant, as things stood he did not have his own property; secondly, to help him to clear his debts. But no figure was given for those debts until the third day of the trial.

8. His case had been stated, that is to say his case as regards maintenance had been stated, in very general terms in his statement filed in December 2009, and it is right to say that the bulk of the trial was taken up with – Mr Guy described it as character assassination levelled at him by the defendants, then dealt with and responded to by the claimant – but it was certainly a matter of the history of relations within the family. There were difficult relations within the family, being traced in considerable detail, which took up the bulk of the time. It was only on the third day, as I say, after I had specifically directed disclosure, that a case on specific indebtedness was laid out on the table with documentary support.

9. Mr Troup claims that really there was not time to deal with that. It had to be accepted, and "no-one seeks to respond to it or dispute the figures: we accept that it could have been done." No doubt it was a judgment that had to be made for the defendant and their legal advisers at the time. How do we deal with this late disclosure? (inaudible) definition of the claim and they chose not to do that and therefore to accept the figures for what they were. That was a matter for them. I do not think I can be influenced to the detriment of the claimant by the fact that they chose not to take time to consider or enquire about those figures or the documents.

10. Of course I entirely accept and give due deference to the pronouncement of the Court of Appeal, Lords Justices Judge and Pill and Lord Woolf MR no less, in the case of Ford v. GKR Construction [2000] 1 WLR 1397 – and they have been quoted helpfully by Mr Troup in paragraphs 17 and 18 of his skeleton argument; and, again, it is unnecessary for me to rehearse those quoted passages which it seems to me are the ones that apply. My difficulty is in determining whether anything different would have occurred before trial had there been disclosure, which is clearly the subject of those initial pronouncements, in particular whether an offer would have been made (a Part 36 offer); also, whether the case would have been approached in a different way by the defendants.

11. One can speculate, of course, but I have nothing concrete, it seems to me, as a basis on which I can say such and such an offer would have been made – probably would have been made – at an earlier stage had definition of the case and supporting disclosure been made at that point. So I do not think that I am well placed to depart from the normal rule in those circumstances, that costs should follow the event; so that is the basis of my order and we can talk about the detail in a moment.'

24. The outcome was, therefore, that the Recorder made the costs order that I have summarised in [2] above.

Judge McCahill's decision to reverse the Recorder's costs order
25. Judge McCahill, on the hearing of the appeal, reversed that costs order and made the order I have summarised in [3] above. In his careful judgment, the judge recorded, in paragraph 34, that it was not submitted that the Recorder's exercise of discretion was outside the permissible range. What was submitted was that he had erred in principle by failing correctly to apply the principles to be derived from the Ford case. I shall come to that authority a little later but record here that the judge cited from both Judge LJ's judgment and also that of Lord Woolf MR. Having made those citations, he continued:

'39. In the light of that authority, Mr Troup contended that it could not be right, in a case in which respondent/appellant had only succeeded on the basis of documentation disclosed on the last day of the trial, that the unsuccessful appellants/defendants should have to pay the costs of the claimant, where effectively there has been a change in the approach of the claimant tantamount to a last minute amendment.

40. Mr Troup submitted that, if a litigant were to succeed at trial only as a result of change of tack or a late amendment at trial, then not only should such a litigant normally be disallowed his costs up to that amendment, but he should also be obliged to pay the unsuccessful party's costs.

41. He also argued that the Recorder fell into error and misapplied or misunderstood Ford, by introducing an unnecessary and impermissible qualification absent in Ford, namely the requirement of proof of a causal link between the late disclosure and prejudice thereby suffered by the person adversely affected by the late disclosure.

42. Although the learned Recorder recognised that there had been a last minute change and/or last minute disclosure of documentation, he went on to decide that, even if that disclosure had occurred much earlier, there was no evidence that these appellants/defendants would have made any offer to settle, and the trial would still have been necessary.

43. So, in a nutshell, the Recorder had found that no material, but only "speculative" prejudice was suffered by the appellants/defendants in the court below by the late disclosure. This was because, even if there had been disclosure much earlier, such was the enmity between the parties, no offer would have been made, or there was no evidence of what offer would have been made, by the defendants/appellants, and a court hearing would have been necessary.

44. Mr Troup submitted that this approach reveals a misreading of Ford.

45. He accepted that in exceptional cases, where it was manifestly obvious that no offer would be made, it would be permissible to have regard to this fact. However, he said that this was not such a case, nor could it be demonstrated to be so.

46. Mr Troup submitted that the true principle in Ford was that a delay in the disclosure of highly material documentation, where only the production of that material enabled the claimant to win or recover anything, robbed the defendants of any opportunity to reflect calmly, maturely and without pressure, upon how they were going to deal with the claimant's case.

47. Before such late disclosure, they had evidence which led them to conclude, realistically in the event because the claimant did not win on the main point, that they would succeed. Up until the detailed evidence of debts was produced, they considered that the claimant could not demonstrate an objective need which would find expression in any judgment in his favour.

48. Mr Troup's point was this: if the claimant in the court below had set out his stall at an early stage to say, "Here is what I owe. These are liabilities. The deceased was my father. I am objectively in need of help," then the approach of the defendants to that might have been different. In a case where a small estate was involved and the costs were going to be significant, the view may well have been taken that it was a case which really had to be met in some way, and quickly, or at the very least for a protective offer to be made.

49. In contrast to this, Mr Troup submitted that, in reality, this was a case presented as a claim for £100,000, and made by someone whose evidence could not demonstrate any objective need, until he went into the witness box.

50. So, contended Mr Troup, the learned Recorder was wrong in saying he could have dealt with the disclosed material by asking for an adjournment, as set out in the exchanges between them on the transcript. That would to be looking through the wrong end of the telescope.

51. Ford was not about the opportunity to consider the lately disclosed material and call evidence to resist it. It concerned the opportunity at an early stage to say, "What are the claimant's prospects of getting something on this evidence, bearing in mind that, if he gets something, there may well be an adverse costs order and it would make sense to make an offer promptly and quickly?"

52. It was the latter opportunity which Mr Troup said was denied to the appellants/defendants, as a result of this late disclosure.

53. In the course of my exchanges with Counsel, I expressed my provisional view that there seemed to be an error of law made by the Recorder in his approach to Ford. It also seemed to me to be wrong to introduce speculation over what might have happened to counterbalance what we know in fact happened.

54. Ford made the point, designed to bring home to those who failed to comply with the relevant Rules, that they had denied the other party the opportunity of taking stock at an early stage, not only of the intrinsic merits of the case but also of the pragmatic and commercial aspects of the case. In other words, the opportunity to decide whether to carry on with the case or to make an offer to settle it.

55. I have come to the conclusion that the learned Recorder erred in principle in introducing, in the context of Ford, an additional requirement of causation. That seems to me to represent a flawed approach to the exercise of discretion, which requires me to look again at the whole question and exercise my own discretion afresh.'

26. The judge therefore proceeded to exercise his own fresh discretion as to the incidence of costs. He ordered Richard to pay the defendants' costs of both the claim and the appeal. That was a disastrous result for Richard, who had won the case. Although he had an ATE insurance policy in respect of any costs liability incurred in the proceedings, that only assisted him in the event that he lost the case, whereas he had not.

Discussion and conclusion
27. Ford was a decision of this court (Lord Woolf MR, Pill and Judge L.JJ). The point at issue was as to the costs of a claim for damages for personal injury. In April 1998 the defendants paid almost £54,000 into court, which they followed in July 1998 with a further payment in of some £41,000. In February 1999 the claimant recovered judgment for damages of some £85,000, a sum falling short of the combined sums paid in. The judge nevertheless awarded the claimant her costs of the claim. To understand why that was so, there is no need to do more than cite from part of the judge's judgment as quoted by Judge LJ, at [2000] 1 WLR 1397, 1399H to 1400B:

'This is a case where the admission of fresh evidence leaves open the question of costs, and the consequence of late disclosure, late discovery in this case, and the admission of evidence which had not previously been disclosed to the claimant, is that the effect of the payment in is nullified. The claimant quite simply could not assess the merits of it. Once the payment in was made, the claimant did everything she could do in the light of the evidence.  … I take the view that the defendants have brought this upon themselves. There is no reason why that evidence could not have been obtained earlier. This case has been going on long enough. They could have obtained video evidence in advance. There is no reason why the evidence of Dr Smith [on the life expectancy issue] could not have been obtained and disclosed in advance. The claimant has had to deal with these as and when they arose.'

28. The appeal was brought by the defendants, who challenged the judge's costs order. The appeal was dismissed. Judge LJ said that, had he been the trial judge, he might have made a different costs order but correctly reminded himself that that was not the point. The appeal could only succeed if the exercise of the judge's discretion was flawed or plainly wrong. Judge LJ continued, at 1400H:

'Whatever the starting point, or even what can be described as the "normal rule" when faced with a payment into court which exceeds the award of damages, the judge reaching his decision about costs is required to take into account all relevant aspects of the litigation. This includes late disclosure, late service of evidence or the development of unanticipated contentions and the stage in the litigation when these events have occurred, their nature and their effect on the outcome.

Civil litigation is now developing into a system designed to enable the parties involved to know where they stand in reality at the earliest possible stage, and at the lowest practicable cost, so that they can make informed decisions about their prospects and the sensible conduct of the case. Among other factors the judge exercising his discretion about costs should consider is whether one side or the other has, or has not, conducted litigation with those principles in mind. That is what Judge Gaskell did here and he was right to do so.

The principles apply with particular force in personal injury litigation when it is to be contended that the claimant is a malingerer, or fabricating evidence, or wildly exaggerating symptoms or their effect. Sometimes claimants do lie, embellish or fantasise, but if that is to be the defendants' case fairness demands that the claimant should have a reasonable opportunity to deal with these allegations. Sometimes sensible grounds for maintaining surveillance on a claimant may arise after the trial has begun. If they do, the defendants cannot be criticised for taking advantage of the opportunity given by an adjournment to do so. Every case, and every consequential costs order, depends upon the individual facts of the case.

In the present case, it is sufficient to say that I can find nothing in the evidence to explain why the defendants found it necessary to maintain surveillance on the claimant after the trial had begun when they had not done so before it. It would be flattering to describe this decision as a last-minute idea. It did not occur until after the trial had begun and for no apparent reason, save that the defendants hoped to use the adjournment to improve their prospects in the litigation, by taking steps that they could and should have taken much earlier.'

29. Lord Woolf MR in his judgment said, at 1403D to F:

'The principle to which Judge LJ referred as to the parties conducting their litigation making full and proper disclosure is even more important now that the Civil Procedure Rules 1998 (the "C.P.R.") have come into force. Under the C.P.R. it is possible for the parties to make offers to settle before litigation commences. As to the disclosure required in relation to that procedure, protocols in specific areas of litigation make express provision. Even where there is no express provision contained in a relevant protocol which applies to the particular litigation, the approach reflected in the protocols should be adopted by parties generally in the conduct of their litigation.

If the process of making Part 36 offers before the commencement of litigation is to work in the way which the C.P.R. intend, the parties must be provided with the information which they require in order to assess whether to make an offer or whether to accept that offer. Where offers are not accepted, the C.P.R. make provision as to what are to be the costs consequences: rules 36.20 and 36.21. Both those rules deal with the usual consequences of not accepting an offer which, when judged in the light of the litigation, should have been accepted.'

30. Judge McCahill also cited those passages from Ford. He appears to have derived from them, and from the actual decision in Ford, some principle of law that he considered the Recorder had erroneously failed to apply in making his costs order after the trial. I find it difficult to identify what that principle was thought to be. The judgments in Ford contain valuable and important guidance on the need for litigation to be conducted efficiently in the particular respects that are reflected in the passages I have cited from them. The only principle to be derived from the case is, however, that which is contained in the first two paragraphs that I have quoted from Judge LJ's judgment. He was, however, there doing no more than providing a reminder that the discharge of the discretionary jurisdiction that a judge is called upon to exercise when making a decision as to costs requires him to take account of 'all relevant aspects of the litigation.' Relating that to the present case, that would certainly include the making by Richard of the late disclosure of the details of his indebtedness. Ford is not, however, authority for the proposition that any shortcoming on the part of a litigant of the nature to which Judge LJ referred dictates a particular costs consequence. If it were, Ford would itself have imposed an impermissible restriction on the very broad discretion that judges have when it comes to the making of decisions as to costs. I regard it as plain that the court did not intend to do that.

31. That being all that Ford decided, the only question for Judge McCahill was whether the Recorder in any way erred in principle in the manner in which he exercised his discretion. With respect to Judge McCahill, it is in my judgment obvious that he did not. The Recorder correctly approached the question of costs by reminding himself that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party (in this case, Richard); but he was equally well aware that, if appropriate, it might be right to make a different order (see CPR Part 44.3(2)). Although he did not refer to it expressly, I regard it as also clear that the Recorder was well aware that in deciding what order (if any) to make about costs, CPR Part 44.3(4) required him to take account of all the circumstances, including the conduct of the parties. In that context, the defendants' main point was that the making by Richard of his late disclosure of the details of his indebtedness put such a different complexion on the case that it reflected conduct by Richard that did not just undermine his claim to recover costs, it showed that he should pay them. The substance of the point was, apparently, that had the disclosure been made earlier, the defendants would or might have made an offer that would or might have disposed of the proceedings, or that they would or might have conducted the litigation differently.

32. I quite accept that the defendants were entitled to raise the fact of the late disclosure for the Recorder's consideration when dealing with the question of costs. It was plainly a relevant circumstance to which the Recorder had to have regard, as the decision in Ford clearly underlined. The Recorder did precisely that. He took careful account of the fact of the late disclosure and concluded that he could not be satisfied that, had it been made earlier, it would have made any difference to the outcome of the proceedings.

33. It is perhaps inappropriate for this court to venture into the factual arena, about which we know relatively little, whereas the Recorder would have learnt and known a good deal about it. What, however, we do know is that (a) the defendants never made any offer to settle the proceedings (at any rate any that was disclosable to the court when ruling on costs); (b) their stance in the proceedings was, and remained, that Richard's bid to show that his father's will failed to make reasonable provision for his maintenance (stage 1) should be rejected, so that there was therefore no basis for the making of any provision for his maintenance (stage 2); (c) they had at no stage themselves sought the disclosure from Richard that he made, which was made only as a result of the order that the Recorder made of his own motion; (d) when the disclosure was made, the defendants made no suggestion that they needed time to consider their position, let alone that the disclosure fundamentally changed the complexion of the case and showed that Richard had a case whereas previously he had failed to do so; they simply persisted in their mistaken stance that Richard should fail at stage 1; and (e) in assessing whether Richard was entitled to succeed at stage 1, the Recorder placed no reliance on the disclosure in relation to his indebtedness.

34. In these circumstances, it appears to me that the Recorder was fully entitled to conclude that he could not be satisfied that, had the disclosure been made earlier, it would have made any difference to the defendants' apparently uncompromising attitude towards Richard's claim. Moreover, although the Recorder does not himself make this point, I regard it as far from clear that, had the late disclosure not been made, Richard's claim would have failed. I have said that the Recorder did not rely on the late disclosure in finding for Richard at stage 1; and a claimant who succeeds at stage 1 will almost invariably also succeed at stage 2. Mr Trace suggested that one type of alternative order that the Recorder might have made would be to order the payment of a lump sum (perhaps of £40,000 or so) by way of provision for a deposit on a property for Richard and Miss Tanton. I have referred in [21] above to the fact that a claim of this nature did form part of Richard's case (and see also paragraph 7 of the Recorder's costs judgment, cited in [23] above). The disclosure about the indebtedness was, he submitted, not therefore necessarily crucial to Richard's ultimate success. I regard that as a valid point.

35. I propose to say no more than that in my judgment the Recorder correctly directed himself in relation to the exercise of his discretion as to the appropriate costs order. He was aware of the general rule as to costs normally following the event, but was also aware that he needed to take account of all the circumstances of the case, the key one to which the defendants attached weight being Richard's late disclosure. He took that into account and decided that, for reasons he gave, it was still appropriate to order Richard to recover his costs out of the estate. Whether another judge would or might have made a different order is irrelevant. The Recorder made no error of principle and made an order that was well within the range of discretion that was open to him. Judge McCahill was, in my judgment, wrong to interfere with his order. There was no basis for doing so.

36. It is for these reasons that I concurred at the conclusion of the hearing in the court's indication that it would allow Richard's appeal. I would set aside paragraphs 1, 2 and 3 of Judge McCahill's order and restore the Recorder's order as to the costs of Richard's claim. In default of agreement between the parties as to the costs of the appeal to Judge McCahill and to this court and the form of our order, I would invite written submissions from counsel.

Lord Justice Patten :
37. I agree.

Lord Justice Laws :
38. I also agree.