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Day v Day [2006] EWCA Civ 415

Appeal against judge’s refusal to award all of the appellant’s costs allowed, where outcome of the case wrongly characterised as a ‘draw’.

Day v Day [2006] EWCA Civ 415

Court of Appeal: Ward LJ and Sir Martin Nourse (14 March 2006)

Appeal against judge's refusal to award all of the appellant's costs allowed, where outcome of the case wrongly characterised as a 'draw'.

This case concerned a dispute between a mother (the appellant) and her son (the respondent) about the beneficial ownership of the net proceeds of sale of a property that had been owned by the appellant's mother-in-law. In 1985, the appellant's husband had provided the money for his mother to buy her council house, for which she was entitled to a 60 per cent discount.

Following the death of the mother-in-law in April 2001 and the sale of the property in September 2001, the net proceeds of sale were paid to the respondent, as the property had been left to him by his grandmother's last will. The main issue at trial was what precisely had been agreed between the appellant's husband and his mother in 1985. The judge considered that the fallback position adopted by both parties, namely that the property was held on a resulting trust for the mother-in-law and her son in the ratio of 60:40, was not displaced by evidence in support of either of the parties' primary submissions. Accordingly, in June 2005, he ordered the respondent to pay to the appellant not only her two-fifths share but also her costs up to, but not including, the hearing.

The appellant appealed against the judge's refusal to award her all of the costs of her claim, contending that: the judge was in error in characterising the outcome of the case as a 'draw', and he was wrong to penalise her for having failed to make any Part 36 offer, since the duty primarily lay on the defendant to make such an offer or pay money into court. On the other hand, the respondent submitted that costs were a matter for the exercise of the judge's discretion, and the appeal court should be slow to interfere; the judge was entitled to treat this as a draw and no order for costs was the appropriate result.

Held, allowing the appeal, that the judge had wrongly characterised the outcome of the case as a draw, and this fundamental error of principle in the judge's analysis entitled the court to intervene.

In dealing with the judge's conclusion that the outcome was a draw, on the basis that neither party succeeded on its primary contention to be entitled to 100 per cent of the net proceeds, the court went beyond the words of Lightman J in BCCI v Ali (No 3) [1999] IRLR 508 (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'), and stated that the question of who was the unsuccessful party could easily be determined by deciding who had to write the cheque at the end of the case. In this case, the mother had had to bring the action simply to recover the 40 per cent share that was rightfully hers.

The court also offered some helpful comments on the question of payments into court, determining that the respondent had had the opportunity to pay the amount of his fallback position into court, by which action he would have protected his position; by failing to do so, he lost the protection of the rules.

Consequently, the appellant was entitled to have her costs of the hearing below assessed if not agreed.

Read the full text of the judgment here