Introduction

The case of Heathcote & Anor v Asertis Ltd ([2024] EWCA Civ 242) presents significant insights into the Court of Appeal's approach to awarding costs in proceedings involving multiple claims and defendants. Asertis Ltd, acting as a litigation funder and assignee of Servico Build Tec Ltd ("Build Tec"), initiated two separate claims against Mr. Heathcote and Servico Contract Upholstery Ltd ("Upholstery"). The core issue revolved around whether the High Court judge, HHJ Stephen Davies, exceeded his discretionary bounds in determining the costs order following a three-day trial. This commentary delves into the intricacies of the judgments, the legal principles applied, the precedents cited, and the broader implications for future litigation.

Summary of the Judgment

The High Court presided over by HHJ Stephen Davies heard two distinct claims:

• The Rewards Claim: Aimed solely at Mr. Heathcote, alleging misuse of funds through an employee benefit trust (EBT) scheme, amounting to £520,000.
• The Payment Claim: Directed at both Mr. Heathcote and Upholstery, concerning a £65,000 payment alleged as a preference under section 239 of the Insolvency Act 1986.

Upon adjudication, the High Court dismissed the rewards claim entirely but upheld the payment claim. Consequently, the judge ordered Asertis to pay 75% of the claimant's costs on the standard basis.

Asertis appealed this costs order, contending that the judge erred by treating the two distinct claims as a single entity for the purposes of the costs order, thereby imposing an undue financial burden on Upholstery, a party not directly involved in the rewards claim.

The Court of Appeal dismissed the appeal, affirming the High Court's discretion in treating the costs globally, especially when the proceedings were managed as a unified package.

Analysis

Precedents Cited

The judgment extensively referenced established precedents to underpin the court's reasoning:

• Allen v Bloomsbury Publishing Ltd [2011] EWCA Civ 943: Emphasized the requirement for relevant factors to be presented to the judge. It posited that a judge should not be criticized for omissions unless a party specifically brought forward the missing factor.
• Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 423: Highlighted that appellate courts primarily review whether a lower court made a significant error in light of presented evidence and submissions, rather than re-evaluating based on unintroduced factors.
• Secretary of State for Transport v Cuciurean [2022] EWCA Civ 661: Reinforced the principles laid out in Allen and Samsung, emphasizing the court's discretion in cost orders and the importance of parties presenting relevant factors during proceedings.
• Flitcraft Ltd v Price [2024] EWCA Civ 136: Demonstrated the challenges in treating multiple claims as a single entity for costs purposes, especially when those claims have distinct legal bases and outcomes.
• Sirketi v Kupeli [2018] EWCA Civ 1264: Addressed scenarios with multiple claimants, illustrating that even with joint proceedings, individual claims retain their distinct nature concerning costs orders.

Legal Reasoning

The crux of the legal reasoning hinged on whether the High Court judge appropriately exercised his discretion under CPR rule 44.2. The judge opted for a global approach to costs, considering the overall outcome of the proceedings rather than dissecting the costs per individual claim. This approach was justified based on:

• The unified management of the proceedings, treating both claims as interconnected components of a single legal dispute.
• The absence of distinct offers or actions necessitating separate evaluation of costs for each claim.
• The recognition that distinguishing costs per claim would complicate the financial burden distribution, especially when one claim had failed entirely.

The Court of Appeal supported this reasoning, emphasizing that the parties had presented the case in a manner that warranted a global consideration of costs. The appellate court underscored the principle that unless a party specifically introduces separate factors or arguments for distinct costs orders, the court retains the discretion to manage costs holistically.

Impact

This judgment reinforces the judiciary's flexibility in handling costs orders, especially in multifaceted litigation. Key impacts include:

• Emphasis on Unified Proceedings: Litigants may be encouraged to bundle related claims within a single proceeding, anticipating a holistic approach to costs.
• Clarity on Costs Allocation: The decision provides clarity that courts may, at their discretion, assess costs based on the overall success or failure of interconnected claims, rather than strictly on a per-claim basis.
• Precedential Guidance: Future cases involving multiple claims and parties can reference this judgment to understand the appellate stance on costs discretion.
• Strategic Litigation Planning: Parties may strategize their claims and cost negotiations, knowing the courts’ tendency towards global cost assessments in similar contexts.

Complex Concepts Simplified

Costs Orders Under CPR Rule 44.2

Under the Civil Procedure Rules (CPR) 44.2, courts possess wide discretion to determine whether one party should pay the costs of another, the amount, and the timing of payment. The default position is that the unsuccessful party pays the successful party's costs, but courts can deviate based on various factors, including the conduct of the parties and partial successes.

Global vs. Issue-Based Costs Orders

A global approach to costs assesses the overall litigation outcome, treating multiple claims as a single entity for the purpose of awarding costs. In contrast, an issue-based approach evaluates costs per individual claim or issue, allowing for a more granular distribution of financial responsibility based on the success or failure of each component.

Successful and Unsuccessful Parties in Multi-Claim Proceedings

Determining who is 'successful' or 'unsuccessful' becomes complex when multiple claims and parties are involved. The court may need to decide whether to treat all claims collectively or to assess each claim separately to determine the appropriate costs order.

Conclusion

The Court of Appeal's dismissal of Asertis Ltd's appeal in Heathcote & Anor v Asertis Ltd underscores the judiciary's endorsement of a global approach to costs orders in cases involving multiple claims and parties. By upholding the High Court's discretion to assess costs holistically, the appellate court affirmed that, in unified proceedings, treating costs collectively aligns with judicial efficiency and the equitable distribution of financial responsibilities. This judgment serves as a pivotal reference for future litigation strategies, emphasizing the importance of how claims are structured and presented within proceedings to influence costs outcomes effectively.