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Co-operate or bear the cost

15 Mar 2013

The High Court has recently affirmed that it could, if it felt it just to do so, depart from the usual award of costs as between the parties to a claim (Webb Resolutions Ltd –v- Waller Needham & Green (a firm) [2012] EWHC 3529(Ch)).

In this case, the Court was critical of the Claimant’s conduct leading up to the start of the claim, and in particular its refusal to provide the Defendant with certain information and documents that it had reasonably requested.

The obligation to co-operate

The conduct of civil claims is governed by the Civil Procedure Rules (“CPR”). Pervasive to the CPR is an encouragement that parties reasonably co-operate with one another from the outset of any dispute in order to increase the chances of an early resolution. This general encouragement is bolstered by a number of Pre-Action Protocols (“PAP”), which set out detailed guidelines for the conduct expected of parties to any particular type of claim.

Settlement and Costs

As part of its general theme to promote settlement, the CPR prescribes a procedure for the parties to make and accept offers of settlement: known as Part 36 offers.

The Part 36 regime sets out clear consequences for the payment of costs between the parties as a result of offers having been made and possibly accepted. Those cost consequences must be applied by the Court when determining costs at the end of the case, unless it would be unjust to do so. In assessing whether it would be unjust, the Court will take into account all the circumstances of the case, including whether the spirit of an applicable PAP had been followed.

Unreasonable Conduct and Liability for Costs

In this case, the Claimant made a Part 36 offer, which the Defendant accepted a year later (thereby settling the claim). Were the Part 36 cost consequences to have been strictly applied, the Claimant would have been entitled to recover from the Defendant all its costs up to the date its offer was accepted.

Prior to the Claimant making its Part 36 offer, the Defendant had requested copies of certain documents from the Claimant in order that it may properly assess its position. The Claimant refused unless the Defendant admitted liability first.

The Defendant argued, and the Court agreed, that, as a consequence of the Claimant’s unreasonable conduct, it should be deprived of its entitlement to recover all its costs from the Defendant. The Court went even further and ordered that the Claimant pay part of the Defendant’s costs. The main reason given by the Court for not following the usual costs consequences was the Claimant’s unreasonable refusal to provide certain documents without good reason, which, the Court found, was not helpful and outside the letter and spirit of the applicable PAP.

Conclusion

This case is a helpful reminder to litigants that they must adopt a co-operative stance from the outset and must (as far as possible) follow the provisions of any applicable PAP. A party that chooses not to conduct themselves in this manner will be at risk of being penalised when costs are determined.

Richard Nelson LLP has experience of advising and assisting Claimants and Defendants from the very start of a dispute. As part of that advice, due consideration of any applicable PAP and the CPR in general will be given in order to agree the most appropriate way forward with the client.

 

If you have concerns regarding any of the issues raised in this article, please do not hesitate to contact us today, and one of our experienced team will be able to discuss those concerns with you.

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