Saturday, 13 October 2012

Successful claimant ordered to pay majority of defendant's costs

Getting costs right.

In the words of Coulson J in the recent case of Brit Inns Ltd and another v BDW Trading Ltd (No 2) [2012] EWHC 2489(TCC) “when civil litigation goes wrong, costs become the critical issue”. 

The case concerns two separate actions, a subrogated insurers’ claim whereby the insurers were able to step into the shoes of their client/ the claimant and retain any benefits or remedies awarded to it and a distinct uninsured claim by the Claimant directly. 

In its subrogated action the Claimant had made two Part 36 offers, which were held to be unrealistic and unreasonable as to costs under CPR44.3.  Conversely, the Defendant made one Part 36 offer, which, although it failed to improve upon the offer at trial, was held to be more realistic and reflected the relevant conduct for the purposes of CPR44.3. Subsequently the Claimant went on to be successful at trial and, although in keeping with the general rule of CPR44.3, Coulson J ordered the Defendant to pay 60% of the Claimant’s reasonable and proportionate costs. The significant reduction of 40% was a result of the Claimant’s failure to adopt the same detailed approach as the Defendant, which could have resulted in settlement at a much earlier stage.

More notably, in respect of the uninsured claim, the Claimant was ordered to pay 90% of the Defendant’s costs primarily owing to the Claimant’s decision to have two separate actions and two separate legal teams inevitably duplicating costs and it was this decision that was held to be unreasonable in respect of costs. 

In reaching these conclusions, Coulson J provides us with a useful summary of relevant principles when dealing with costs where the claim is exaggerated and the Defendant has been unable to make an effective Part 36 offer.  This case undoubtedly serves as a reminder to parties to take a much more realistic and cooperative view of the value of a claim when faced with the harsh realities of recovery and costs in litigation.

For advice or further comment on the above, please contact Partner Andy Wilks on 020 7841 0390.