Guidance on issue-based costs orders has recently been provided by the Chancery Division in George Hugh Pigot v Environment Agency  EWHC 1444 (Ch).
Below is a summary of principles which the court confirmed it is guided by in determining the suitability of issue based costs orders:
- The fact that a party was not successful on every issue did not, alone, justify an issue-based costs order or make it appropriate to deprive the party of their costs.
- An issue-based costs order might be appropriate if raising a discrete or distinct issue had caused additional costs to be incurred or where the overall costs were materially increased by the unreasonable raising of one or more issues on which the successful party failed.
- If a discrete issue causing additional costs to be incurred was reasonably raised, the overall successful party was likely to be deprived of its costs of the issue. If the issue was unreasonably raised, the overall successful party was likely to be ordered to pay the costs incurred by the overall unsuccessful party on that issue. An issue might be treated as unreasonably raised if it was hopeless and should never have been pursued.
- Where an issue-based costs order was appropriate, the court should attempt to reflect it by ordering payment of a proportion of the receiving party's costs if that was practicable.
- An issue-based costs order should reflect the extent to which the costs were increased by the raising of the issue; costs which would have been incurred even if the issue had not been raised should still be paid by the overall unsuccessful party.
- Before making an issue-based costs order, it was important to stand back and ask whether, applying the principles in rule.44.2 of the Civil Procedure Rules, it was the right result in all the circumstances of the case and reflected the overall justice of the case.
On the facts of Pigot, the request for an issue-based costs order failed, as the claimant had not acted unreasonably in bringing the aspect of its claim which failed. Put simply, it had put forward a different legal basis for the same claim.
Although potentially useful to unsuccessful parties when considering whether or not the court should be invited to make an issue-based costs order, this decision does not make it more likely than before that the court will do so, as evidenced by the ultimate ruling in this case. The court is generally reluctant to make such orders given the inevitable intertwining of costs across multiple issues and the potentially costly exercise to identify costs specifically related to a specific issue. Courts are more likely to order a flat percentage reduction to the overall successful party’s costs to acknowledge the failings on a specific issue.
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