March 10, 2017

Indemnity Costs - Car Giant v London Borough of Hammersmith (High Court)

Whether defendant entitled to indemnity costs after beating its Part 36 offer because claimant slow to mediate

The claimant failed to better the defendant's Part 36 offer at trial. Unlike the position for claimant Part 36 offers, defendants are not presumed to be entitled to indemnity costs from the date of expiry of the relevant period for their Part 36 offers. However, the court does have a discretion to order indemnity costs under CPR r44. It has previously been held that it might be appropriate to order indemnity costs because of an unreasonable refusal to engage in mediation. In this case, it was argued that there had been an unreasonable delay by the claimant in agreeing to mediate or take part in some form of ADR. The delay was from May 2015 to October 2016.

Furst QC held that "a court should be slow to conclude that this delay is unreasonable or that, if it is, it would justify an order for indemnity costs". That was because it could not be said that mediation in May 2015 would have been successful. Furthermore, the courts "should be slow to criticise a party's behaviour where decisions such as when to mediate are matters of tactical importance where different views may legitimately be held. In this case [the claimant] took the view that mediation was more likely to succeed when the experts' views had been fully set out. That is a perfectly possible point of view". A failure to accept a defendant's Part 36 offer also cannot in itself justify indemnity costs.

Accordingly, the defendant's costs should be assessed on the standard basis.