Part 36 and Indemnity Costs

The Court of Appeal has delivered an important judgment in BURGESS V LEJONVARN (2020) EWCA Civ 114.

D made an early Part 36 offer of £25,000. C made a series of descending offers to settle. C lost at trial. D, who was only awarded standard costs, appealed.

Granting permission to appeal, Coulson LJ  noted the imbalance in the way that parties making good offers are treated. He then added his own additional issue.  D had significantly exceeded her budget. Does the indemnity costs principle, which is not contemplated by CPR 3.18 , permit her to do so ?

Rupert Cohen persuaded the Court that indemnity costs were payable because the action was “speculative, weak , opportunistic or thin “.

As to the conduct of the litigation, dealt with in the costs judgment from [17] – [22], the judge addressed various specific matters such as the confused nature of the pleadings, the making of allegations without expert evidence, the shambolic nature of the disclosure, and the “haphazard and spray gun manner” of the case on defects.

The hopeless nature of their case should have been evident after the claimants had digested the earlier Court of Appeal decision about the scope of liability; (2017) EWCA Civ 254. Accordingly, indemnity costs were due starting one month after the judgment. The Court also confirmed, citing paragraph 43 of DENTON, that the budget as such was not relevant when dealing with indemnity costs .

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