B2/2002/1415 (A); B2/2003/0460; B2/2002/1415
Neutral Citation Number: [2004] EWCA Civ 122
IN THE SUPREME COURT OF JUDICATURE 
IN THE COURT OF APPEAL (CIVIL DIVISION) 
ON APPEAL FROM NOTTINGHAM COUNTY COURT
(MR RECORDER GOODCHILD)
Royal Courts of Justice 
Strand 
London, WC2 2LL 

Friday, 23 January 2004
 B E F O R E:

LORD JUSTICE THORPE 
 
LADY JUSTICE ARDEN 
 
MR JUSTICE PARK 
 
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HARCHARAN SINGH AUJLA

Respondent/Claimant
-v-

GURMEJ SINGH SANGHERA 
Appellant/Defendant 
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(Computer-Aided Transcript of the Stenograph Notes of
Smith Bernal Wordwave Limited
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MR S DIN (instructed by The Smith Partnership, Derby DE1 1LS) appeared on behalf of the Claimant 
MR J HOWLLET (instructed by Timms Solicitors, Derby DE1 1SU) appeared on behalf of the Defendant
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J U D G M E N T 
Friday, 23 January 2004

1.	LORD JUSTICE THORPE:  Lady Justice Arden will again give the first judgment on this final point. 
		
2.	LADY JUSTICE ARDEN:  I have already set out the learned recorder's order as to costs which, to recap, was to reserve the costs.  It is not clear precisely to what stage of the proceedings they were so reserved.  At the end of the learned recorder's judgment he dealt with the question of costs in these terms:  
"Next, the issue of costs.  For the assistance of counsel, certainly for this afternoon, costs; [sic] the phrase "a curse upon both your houses" comes to mind and, given what I think about the evidence on both sides, unless I am persuaded to the contrary, I am not inclined to make an order for costs one against the other as I feel on one side we have the claimant arguing against any interest in the property and on the other side the Defendant arguing against any form of financial payment for the business that he got which, we all know, ultimately failed.  That is my indication.  I will hear argument to the contrary.  I would, in other words, leave costs where they lie." 
I wish to make two points about this passage in the learned recorder's judgment.  First, as Park J pointed out in argument, the final sentence, suggests that the order which the learned recorder proposed to make was that there should be no order as to costs.  Counsel has explained to us that the recorder was persuaded to reserve them in the manner they are so reserved by his order.  However, I do not think that that of itself indicates any change of heart by the judge; he was simply not inclined to make an order, certainly at that stage, and the fact that the costs were reserved would not preclude the court from taking precisely the same view at the end of the day.  
3.	He starts his judgment by referring to "a curse on both your houses".  I think more properly the phrase is "a plague on both your houses".  But he goes on to explain that by saying that on the one side the claimant failed in his claim that Mr Sanghera had no interest in the Mills and on the other side that Mr Sanghera had failed to convince the recorder that he was not liable to make any financial payment for the business which he obtained from Mr Aujla.  
4.	Now, that point is significant because Mr Howllet has submitted to us that the real motivation for the recorder's order as to costs was the view he took as to the parties' credibility; and this is undoubtedly an issue to which the judge adverts on several occasion in his judgment.  For instance, he starts his judgment at page 2 by saying: 
"The next matter is that we have adopted, in looking at the evidence, an adversarial system.  Counsel have achieved, both of them, the aim they undertook when first cross-examining the major witnesses.  Their aim was to destroy those witnesses' credibility.  I am bound to say that the Claimant's credibility was rapidly destroyed.  I am also bound to say that the Defendant's as a witness was rapidly destroyed as well.  The credibility of both of them, in my view, has, to use the old phrase, to be taken with a pinch of salt."  
Likewise at the very end of his judgment the recorder said this: 
"Both sides, however, go away with the knowledge that I was not overly impressed at their ability to be truthful in the witness box but I think I have come to the true position after hearing carefully the evidence over several days.  As I said, I am grateful to counsel..."  
5.	When it comes to looking at the recorder's reasons for his order as to costs, it seems to me that the recorder was not persuaded by the fact that both sides had lacked reliability as witnesses, but rather, by the comparison between the two claims being made, first, that the claimant had claimed that he was, in effect, the absolute owner of the property, and second, the defendant had failed to persuade the recorder that he was not liable to make any payment for the business.  
6.	So far as the latter ground is concerned this court has already set aside the material part of the recorder's order because the question of any payment between the parties for the business was outside the issues before the recorder, as was the question of any liability to the lenders for the right of Mr Aujla to any security for the defendant's share of the Mills.
7.	That being so, the basis on which the learned recorder made his order is completely undermined and, in my judgment, the correct conclusion is that the recorder's order as to costs has to be set aside and this court has to exercise a discretion again.  
8.	As I see it Mr Din is correct in submitting that the case was won by Mr Sanghera.  He was the winner and the first position must surely be that costs should follow the event.  
9.	Mr Howllet's submission, as I have indicated, is that the court was entitled to make the order it did because of the views which it took as to credibility.  There have been many references in the judgment to which we have been referred.  I should note that Mr Din, for his part, submits that Mr Sanghera may have ducked and weaved in the past, but he did not lie to the court.  
10.	However that may be, the position is that the recorder, who had heard the evidence over many days, took the view that it was not appropriate to reflect his view of the reliability of the parties in his order as to costs.  He made it for different reasons, namely, that there was no true winner.  As I see it there was a true winner and it would not be right for me to substitute any view about the credibility of the parties which penalised them on costs on that basis.  Accordingly, in my judgment, the order which this court should substitute for that of the recorder is an order that the claimant should have his costs of the action before the recorder.  
11.	Accordingly, I would allow the appeal on costs on that basis.  
12.	MR JUSTICE PARK:  I agree.
13.	LORD JUSTICE THORPE:  I also agree.  
(Appeal allowed; further orders as per agreed minute of order).