Summary of Recent Cases – Costs

It was not permissible to discount a number of failures to comply with the requirements of Part 36 as matters of mere technicality
F&C Alternative Investments (Holdings) Ltd & Ors v Barthelemy & Anor [2012] EWCA Civ 843
Rule 36.14 represented a departure from otherwise established costs practice and imposed deliberately swingeing costs sanctions on claimants who failed to beat a defendant’s Part 36 offer. That was designed to encourage a sensible approach to offers and promote settlement. But there was no reason or justification to indirectly extend Part 36 beyond its expressed ambit. The general rule was that for an offer to be a Part 36 offer, it had to strictly comply with the requirements. It was not permissible to discount a number of failures to comply with the requirements of Part 36 as the merest technicality.

A court awarded costs of a summary judgment on an indemnity basis as allegations of unconscionability had only come to light in a party’s skeleton arguments, and there had been unparticularised serious allegations of fraud.

Halliwells LLP (In Administration) v Ian Dafydd Austin & Ors [2012] Ch D 25/06/12
The question for the court was whether H’s conduct took the case out of the norm and therefore warranted the court’s disapproval by way of an order for indemnity costs. It was only through H’s skeleton arguments that it became apparent that there were arguments on unconscionability alleging that B had been guilty of sharp practice; although not as derogatory as the allegations of fraud, that was still an unexpected and new point.

The appropriate costs approach where a claimant had succeeded in a contractual claim, but failed in a tort claim, was to make deductions from her claimed costs to reflect the proportion relating to the tort claim
Niloufer Braganza v (1) BP Shipping Ltd (2) BP Maritime Services (Singapore) PTE Ltd (Costs) [2012] EWHC 1612 (Admlty)
If the tort claim had not been introduced a certain amount of further work would not have been necessary. A deduction of 40 per cent was made to reflect the tort claim. In addition, a deduction of 15 per cent was made to reflect D’s legitimate claim to its costs of the failed tort claim, in circumstances where it had been willing to pay the principal sum claimed in contract and where the C had been unwilling to negotiate on the basis of that offer. Therefore the D was ordered to pay 45 per cent of C’s costs.

Acceptance of the Part 36 offer could have been treated as the local authority’s willingness to compromise a particular claim without prejudice to the stance that it might adopt in other cases.

Timothy Martin Hemming (T/A Simply Pleasure Ltd) & 6 Ors v Westminster City Council [2012] EWHC 1582 (Admin), 12/06/12
It was held that the Part 36 regime was intended to encourage defendants to accept appropriate offers of settlement. The local authority’s acceptance of the offer would not have required them to accept any principle at all and would not have created any precedent because it could have been treated as the local authority’s willingness, on that occasion, to compromise a particular claim without prejudice to the stance it might adopt in other cases. It was therefore not unjust for the consequences provided by r.36.14(3) to follow.

July 27, 2012 · Editorial Team · Comments Closed
Posted in: Cases