This case concerned a dispute relating to the composition of the so-called board of management of the unincorporated association known as Shree Swaminarayan Satsang (“the Organisation”) which centres around a temple in Stanmore, Middlesex. According to the Judge, they were hostile proceedings brought by one group of people who were all members of the board of the Organisation against another group of persons who disputed that status and contended that only some of them were members of the board.
The court referred to the previous case of R (Boxall) v Waltham Forest LBC, where the court held that it had the power to make a costs order when the substantive proceedings had been resolved without a trial, but the parties had not agreed about cost. The court in that case gave the following guidance:
- The overriding objective is to do justice between the parties without incurring unnecessary court time and consequential additional costs.
- At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion. In between the position will, in differing degrees, be less clear. How far the court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.
- In the absence of a good reason to make any other order the fall-back is to make no order as to costs.
In BCT Software Solutions v C Brewer & Sons Limited [2003] the Judge made the following observations:
- There are, no doubt, straightforward cases in which it is reasonably clear from the terms of the settlement that there is a winner and a loser in the litigation. In most cases of that description the parties themselves will realistically recognise the result and the costs will be agreed. There will be no need to involve the Judge. If he becomes involved, because the parties cannot agree and ask him to resolve the costs dispute, the decision is not usually a difficult one for him to make.
- There are, however, more complex cases in which it will be more difficult for the judge to decide who is the winner and who is the loser without embarking on a course, which comes close to conducting a trial of the action that the parties intended to avoid by their compromise. The truth often is that neither side has won or lost. It is also true that a considerable number of cases are settled by the parties in the belief that the terms of settlement represent a victory, or at least a vindication of their position, in the litigation, or in the belief that they have not lost; or, at the very least, in the belief that the other side has not won.
In this case, the claimant submitted that when one looked at the issues raised by the Part 8 claim and compared them with the schedule of the consent order it was obvious that the claimant had been substantially successful. In contrast, the defendants suggested that there were no clear winners or losers and so the general rule that there should be no order as to costs would be appropriate. The defendants submitted that it should be viewed as part of a pragmatic decision to agree to work together with the claimants to resolve the inadequacies of the constitution for the benefit of the Organisation.
The Judge decided that by comparing the claim with the terms of the consent order agreed at the end of the day, this was a case in which it was possible to reach a clear conclusion that the claimants had been the successful parties. By the schedule to the consent order the defendants had agreed that all of the claimants were members of the board of the Organisation, which was how the claim had been framed. He also took into account the general rules that the unsuccessful parties to litigation should pay the costs of the successful parties, which is supported by a consideration of the conduct of the parties and the offers made to settle pursuant to CPR 44.3(4). He, therefore, ordered that the defendants should pay the costs of the claimants on a joint and several basis.
This case offers helpful guidance as to how the courts will approach the question of costs if this issue has been unresolved when settling a matter. Sometimes the parties cannot reach an agreement on the question of costs and it will be necessary for the courts to step in although it is sensible to try to avoid this, if at all possible. The fall-back position will be that there should be no order for costs, but, as this case demonstrates, this will not always be the position and where it is obvious who the winner is, a court will be prepared to order costs in their favour. Where the position is not so clear-cut a court will have to decide whether to look into previously unresolved substantive issues and this will depend on the circumstances of the case, the amount at stake and the conduct of the parties.
Jadavji Ramji Hirani and others v Manji Jina Hirani and others [2012] EWHC 1645 (Ch)