April 01, 2011
In the recent High Court decision of D Morgan Plc v Mace amp; Jones (A Firm) (No. 3) [2011], the judge gave further guidance on when indemnity costs will be awarded in a civil litigation claim.
Indemnity costs can be awarded against either party in a court case. They differ to a standard costs award in that whilst standard costs only cover a proportion of the other side’s expenses in bringing or defending the claim, indemnity costs are intended to cover all of the other side’s expenses.
The judge stated that indemnity costs should first of all, only be awarded ‘when there has been some conduct or some circumstance which takes the case out of the norm’. The unreasonable conduct in question must be ‘to a high degree’. Such conduct can include where it was clear that the defence or case brought was fundamentally flawed from the outset but the claimant or defendant continued to pursue it in any case.
Although the refusal to accept a ‘Part 36’ offer to settle a claim and then failing to beat the offer in the judgment would not normally, in itself, justify indemnity costs, the judge held that this factor in combination with others such as the speculative nature of the claim and the unreliable and untrue evidence given by the claimant, would suffice.
The case emphasises the importance of acting reasonably throughout litigation proceedings, with a view to settling the case wherever reasonable to do so, instead of blindly pursuing a case at any cost.
