LEXLAW Solicitors & Barristers
Deputy Costs Judge Joseph in the case of Coram v D R Dunthorn & Son Ltd [2023] EWHC 731 (SCCO) affirmed that the costs of instructing leading counsel for a three-day trial were not recoverable as they were deemed unreasonable and disproportionate for a case with a maximum value of £115,000 (settled for £75,000).
An award of indemnity costs might give a party in a lawsuit a major advantage, due to the fact that the paying party will be responsible for the legal expenses and the proportionality criterion will not be applied. Since costs on the standard basis are the norm, the indemnity costs principle (included in Civil Procedure Rules 44.3(3)) can be considered punitive in nature.
In Pallett v MGN Ltd, a case concerning the newspaper phone hacking scandal, the High Court orders the Defendant, owner of the Mirror newspaper, to pay all of the Claimant’s costs of the proceedings, despite arguments that they had accepted the settlement offer outside of the 21 day relevant period under CPR Part 36.
This latest High Court case again demonstrates the pitfalls for litigants who unreasonably refuse to engage in Alternative Dispute Resolution such as mediation to resolve issues. Parties that fail to do so risk be punished by the court when it comes to costs.
In a multi million pound breach of contract case, where there was no substantive defence to the claim and the Defendant accepted summary judgment and liability for the Claimant’s costs, the High Court held that a Claimant’s Part 36 offer to accept only 0.3% less than the full sum being claimed was a “genuine offer to settle” under CPR 36.17(5)(e).
If a party completely foregoes mediation will that party be punished in costs? The High Court judgment highlights that although the court cannot compel parties to mediate, an unreasonable refusal to do so is likely to result in costs penalties for a defaulting party. The costs risks of unreasonably refusing to mediate or not responding to a mediation proposal may be severe.
All solicitors have a duty to advise their clients about alternative dispute resolution (ADR), including mediation. Along with the ADR requirements in the pre-action protocols, the CPR and court schemes, overall, mediation is an option that must be considered by parties both before and during litigation (and a failure to do so can lead to costs penalties).
In Lejonvarn v Burgess and Burgess [2020] EWCA Civ 114, the Court of Appeal have confirmed that the High Court was wrong not to punish the claimants who pursued…