This Court of Appeal decision concerned the circumstances in which the award to a Claimant who beats its own Part 36 Offer of some or all of the specified relief under CPR 36.17 may be considered to be unjust.
In Richard v The British Broadcasting Corporation (BBC) & Anor  EWHC 1666 Chief Master Marsh urged a “degree of caution” when considering whether to make a comment about incurred costs at a costs management hearing, saying “To my mind there is little or no value in the court recording a general comment about incurred costs along the lines that the incurred costs are “substantial” or they are “too high”. If the court wishes to record a comment that the incurred costs are “excessive” or they are “unreasonable and disproportionate” it will wish to be sure that the comment is made on a sound footing, rather than impression, because commenting is quite unlike the exercise of approving a figure per phase for future costs. The court will also wish to consider the utility of making a comment unless it is specific and well-founded.”
These sentiments have been echoed by Master Kaye in a decision handed down last November, but only just published.
Following the dismissal of all claims by the High Court in this construction dispute, and an award of costs on the standard basis to the appellant (defendant), the Court of Appeal had to determine three issues, namely:
a) Whether it was a case in which the respondents’ pursuit of what were said to be “speculative, weak, opportunistic or thin claims” could properly be described as out of the norm such as to warrant an order for indemnity costs.
b) Whether the respondents’ failures to accept and subsequently to beat the appellant’s Part 36 offer, made at a very early stage in the proceedings, also meant (either separately or taken cumulatively with the pursuit of these particular claims) that an order for indemnity costs was warranted.
c) The relevance, if any, of the fact that the appellant’s approved costs budget was said to be £415,000, but that any assessment on the indemnity basis would start at the appellant’s actual costs figure of not less than £724, 265.
Mr Justice Teare determined an application for indemnity costs following the dismissal of the second claimant bank’s US$77 million claim for an indemnity from the defendant underwriter pursuant to a war risks insurance policy for the constructive total loss of the vessel BRILLANTE VIRTUOSO by piracy.
This was the first appeal in which the recoverability of inquest costs in civil claims has fallen to be considered since introduction of the Jackson reforms. It followed an assessment of costs by Deputy Master Keens in the SCCO when he allowed the sum of £88,356.22 as a against an original claim of £122,000 excl VAT. The claim was for damages for breach of Article 2 of the European Convention on Human Rights, negligence and misfeasance in public office following the death of Ms Jones who became ill at a police station.
This was an appeal by the mother in Children Act proceedings against an order that she do pay £109,394 in costs. In the course of the proceedings the mother had been given a four year prison sentence in Russia for attempting to bribe a police officer to instigate criminal charges against the father in order to further her own claim on the children. Despite her incarceration, the mother had continued to pursue an appeal against an order that the father have custody of the children, before finally conceding, leaving only the incidence of costs to be decided.
The long awaited and much anticipated judgment in these appeals has been handed down.
The appeals raised a number of specific issues arising out of the respondent’s successful challenge on an assessment of the claimant’s costs to the amount of the ATE insurance premium recoverable by the appellants.
They also raised a number of wider points relating to reasonableness and proportionality and the proper approach to the assessment of costs.
This was an appeal against the decision of Master McCloud not to award the claimant a 10% ‘additional amount’ under CPR 36.17(4) on grounds that it would be disproportionate and unjust to do so where the claimant had beaten its own offer by just £7,000 on a bill assessed at £431,813.05.
In April 2013 the “old” proportionality test in the then CPR 44.4(2) was replaced by the “new” proportionality test in CPR 44.3(5). The essential difference being that necessity no longer trumps proportionality. There remain a few cases still being dealt with under the “old” rule. This was one of them. It was an appeal against decisions made by the Senior Costs Judge, Master Gordon-Saker in the course of a detailed assessment, including that the base fees, viewed globally, were not disproportionate.
It’s been six years since the introduction of the “new” proportionality rule in CPR 44.3(5). In that time there have been a handful of decisions at circuit judge level but none from the higher courts, until now. On appeal from Master Whalan in the Senior Courts Costs Office, The Hon. Mr Justice Marcus Smith was tasked with determining a number of issues arising from the detailed assessment of costs including the correct approach to proportionality. Unfortunately, but not surprisingly, the decision does not offer much in the way of general guidance.