Summary

A defendant was entitled to indemnity costs in circumstances where an enormous amount of time, costs and court resource had been wasted as a result of the claimants' unwillingness to accept an amount, offered by the defendant in settlement, that they had been prepared to settle at only a few days earlier.

Facts

The court gave directions on costs following a professional negligence claim between the claimant group of companies (C) and the defendant surveyors (D).

C had sued D for professional negligence during the course of its surveying. C accepted that overall, having lost in the proceedings, they had to pay D's costs at least on a standard basis but D argued that it should be entitled to indemnity costs. Expert reports had been exchanged in the summer of 2012 and in October 2012 there were several Part 36 offers made between the parties. After various offers and counter-offers C offered to settle for £729,000 plus costs. That offer expired on a Monday afternoon, and D did not accept the offer by that time. A few days later D made an offer for settlement at exactly that level but C refused to accept that offer. On the first day of trial the judge adjourned the trial but before he did so he expressed doubts about some of the evidence of C's expert, which he thought led to concerns as to how C's claim could proceed.

Held

(1) C had an arguable case which raised relatively simple issues as to whether or not D had failed to exercise reasonable care and skill. At least up to September/October and possibly going into November 2012, whilst there had been some attempts to settle the case, matters had proceeded in the usual way to trial. If an appropriate Part 36 offer had been accepted there would have been no room for any costs basis other than a standard basis. However, after the trial date, a substantial amount of cost and effort was expended as the result of the putting forward of evidence from C's quantity surveyor, whose reasoning for that evidence did not appear anywhere in his exchanged reports. Up to that stage, it was a relatively standard professional negligence claim and C were putting forward a case which, if their evidence was believed and accepted, would have succeeded (see paras 4-5, 27-29 of judgment). (2) The parties should have considered seriously the impact of costs. It was not just the court which was bound by the overriding objective. Where effectively both parties were prepared to settle at exactly the same figure within a few days of each offer being put forward, for C to have withdrawn from settlement seemed unjustifiable. Nothing had happened between the time C's offer of £729,000 plus costs had expired and the timing of the offer made by D for settlement at exactly that level a few days later. An enormous amount of time and costs and court resource had been wasted thereafter as a result of C's unwillingness to accept the figure that they had been prepared to settle at only a few days earlier. That fact, coupled with the fact that the judge had expressed reservations about C's case, meant that there was no justification for going on with the case at that stage. The Monday following the hearing in front of the judge was an appropriate date for indemnity costs to start. D should have its costs on the standard basis until that date and indemnity costs thereafter (paras 31-35).

Costs determined