Home Information Cases Lilian Day v Philip John Day [2006]

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Lilian Day v Philip John Day [2006]

Summary

A judge had erred in the exercise of his discretion by making no award of costs on the basis that neither party had been more successful than the other when it had been clear that the appellant had succeeded in the action.

Facts

The appellant (L) appealed against a costs order made in proceedings in which she had claimed a beneficial interest in the proceeds of sale of a property previously owned by her mother-in-law (E) and left to the respondent (P) in E's will. E had occupied the property as a council tenant and purchased it at a discount of 60 per cent pursuant to her right to buy. L's late husband (J) had provided the remaining 40 per cent. On that basis L claimed a beneficial interest in the property. It was her case that E held the property upon constructive trust for herself and J and that she was entitled to a share of the proceeds of sale. By his defence P claimed that J's contribution to the purchase price was a gift and that accordingly E was entitled to leave the whole of the property to him. Both parties advanced an alternative fallback argument that E held the property upon a resulting trust for herself and J in the ratio of 60:40. The trial judge rejected both primary arguments advanced by the parties and held that their identical fallback arguments were correct. On the issue of costs the judge held that the result had effectively been a draw, and that neither party had sought to settle the matter based upon their fallback arguments. He accordingly made no order for costs save that he awarded L her costs up to the close of pleadings. L argued that the judge's decision on costs was wrong. She argued that the judge was wrong to have reached a conclusion that the result of the proceedings was effectively a draw, and that he was wrong to find that no effective offers to settle had been made by either party.

Held

(1) The question of who was the unsuccessful party or the successful party to an action could be determined by who ultimately wrote the cheque at the end. There was no question in the instant case that that party was P. P had failed in the action and L had succeeded, more so by the fact that P had refused to pay L any money notwithstanding his fallback position in the proceedings. Accordingly, the ordinary rule that costs followed the event applied and there was nothing in the instant case to depart from that ordinary rule. The judge had therefore erred in the exercise of his discretion by concluding in effect that neither party had won. (2) The judge had also erred in concluding that neither party had made any offers to settle. The valuable use of payments into court and Part 36 offers placed an onus upon the defendant. P had the ability to make a payment into court based upon his fallback position, but he failed to protect his position. He had made an offer, but that offer had been substantially lower than the award made to L. The judge had fallen into error by not taking that matter into account. In the circumstances, the judge's exercise of discretion was flawed and L was awarded her costs of the action.

Appeal allowed.

Court of Appeal
Ward LJ, Sir Martin Nourse
Judgment date
14 March 2006
References

LTL 14/3/2006, Law Society Gazette (30 March 2006), [2006] All ER (D) 184 (Mar)