The appellant (A) appealed against a decision concerning the interpretation of a costs provision in a Consent Order she had agreed with the Respondent firm of solicitors (R) and two other parties to the proceedings (OP).
A had brought a claim against R for professional negligence and against OP seeking a declaration that she was not liable to make a payment under a contract and transfer.
A settlement was reached and a Tomlin Order was made. In relation to costs, the Order stated that R would pay A’s costs of the action against R only, namely costs which “relate exclusively” to the professional negligence claim against R and did not encompass any costs incurred by A in respect of any dispute with OP.
Following a dispute as to the effect of that paragraph, a Master Haworth Ordered that the effect of the Consent Order was that R was only to pay costs incurred exclusively against it and that it was not liable in respect of the costs of the case which were not incurred either exclusively against OP or in common with OP.
A submitted that the common costs should be apportioned between the claims against OP and R.
Mr Justice Newey (sitting with assessors) held in accordance with established case law that there was a distinction between apportionment and division Medway Oil and Storage Co Ltd v Continental Contractors Ltd (1929) AC 88 HL applied.
In so far as common costs could be attributed to the claim against R (as per the process of division in Medway Oil), they represented costs which “relate exclusively” to the professional negligence claim against R, within the meaning of the Consent Order, Medway Oil applied.
However, that part of the Consent Order did not extend to any other common costs. An item of common costs which was not susceptible to division would not “relate exclusively” to the clam against R; it would also relate to the claim against OP.
Similarly, where division was appropriate, R could have no liability in respect of so much of the item in question as was not, on division, allocated to the claim against it; the balance of the item could not “relate exclusively” to the professional negligence claim.
The words “relate exclusively” precluded ordinary apportionment.
Therefore, common costs did not fall to be apportioned.
The decision of the Cost Judge could be read as barring both apportionment and division, which was not correct.
It was therefore appropriate to set aside the relevant part of the Order he had made and instead order that R was not liable for common costs except to the extent that those costs fell to be attributed to the claim against them by division, rather than apportionment.