Article by Professor Dominic Regan
In the space of just 9 days we have had 2 important decisions from the High Court. In both cases the claimant was awarded indemnity costs because the defendant failed to engage in Alternative Dispute Resolution. The beauty of indemnity costs is that they are not subject to the dreaded test of proportionality.
In DSN V BLACKPOOL FC (2020) EWHC 670 (QB) Griffiths J in an elegant judgment which every Costs Lawyer should read dealt with Part 36, budgets, ADR and indemnity costs.
The claimant succeeded in an historic sexual abuse claim against the defendant. He also bettered his Part 36 offer to accept £10,000 made on 2nd December 2019.At a Costs hearing before the Trial Judge the real dispute between the parties was about the basis upon which costs should be paid. C contended for indemnity costs on 2 bases. The first was that such costs are provided for under CPR 36.17(4). Furthermore, C also pursued indemnity costs on account of the conduct of D. It had repeatedly refused to engage in ADR. The defendant argued that the costs of the claimant were outrageous, being perhaps ten times the award of about £20,000. D wanted costs confined to the standard basis so that a full-on challenge could be advanced in the name of proportionality.
The Judge was rightly having none of this. Indemnity costs are an integral part of the raft of enhancements which accrue to a claimant making a good offer to settle. The defendant fought when it should have settled.
We then move to even more indemnity costs! On the back of the effective Part 36 offer C was entitled to them from December 2019. However, C secured a further years’ worth of such costs because of the conduct of D. Master McCloud in giving directions had ordered the parties to give serious consideration to Alternative Dispute Resolution. D refused to engage and filed evidence explaining that it believed it had a total defense so ADR would be futile. Remember, D lost at trial.
Meanwhile, in BXB V WATCH TOWER AND BIBLE TRACT (2020) EWHC 656 (QB) an identical award of indemnity costs was made because the defendant not only ignored a direction to give the matter serious consideration but also failed to file a written explanation as to why it had taken that stance .
ADR is a red-hot topic and indeed in the new White Book published 10 days ago it is suggested by Sir Geoffrey Vos in his introduction that the time has come to consider whether the Court should positively order parties to engage in ADR. Always suggest ADR. If your opponent as much as mentions it, you should respond constructively. Never ignore it!
Photo by Bill Oxford