Costs News

10 June 2021
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Claimants awarded £2,000 for £3.7m claim hit by indemnity costs order

Claimants awarded damages of £2,000 in a claim it pleaded at £3.7m have been ordered to pay the defendant indemnity costs from 10 months before the defendant made a far larger part 36 offer, as a result of their conduct of the litigation.

In Beattie Passive Norse Ltd and Anor v Canham Consulting Ltd (No.2 Costs) [2021] EWHC 1414 (TCC), Mr Justice Fraser ruled that the claimants should be penalised for providing an untrue response to a key question in a request for information made by the defendant, Canham Consulting Ltd, about both the particulars of claim and the reply.

In the main decision on 30 April in a professional negligence claim against structural engineers, the judge dismissed the claim brought by one of the claimants, NPS Property Consultants, and awarded £2,000 to the other, Beattie Passive Norse, in respect of a claim pleaded at £3.7m.

The judge stressed that this was not an award of nominal damages, but it fell far short of the two part 36 offers made by Canham. The last date of acceptance for the first one, for £50,000, was 11 January 2021. Canham sought an order for all of its costs for the whole action from its commencement, to be assessed on the indemnity basis, citing the claimants’ conduct of the case.

The claimants contended for the conventional outcome of costs where a defendant relied upon its own part 36 offer which a claimant failed to beat, relying in part on what they submitted was an unreasonable refusal on the part of Canham to mediate at any time prior to early 2021.

However, the judge focused on the untrue reply to the request for information made on 13 March 2020: “From that date on, the claimants were advancing a plainly untruthful case on a major and central point in the litigation. There is simply no excuse for this, and none has been proffered.”

As a result, the refusal to mediate was “not unreasonable in all the circumstances of the case”.

Taken with various other factors – including that it was “plainly unreasonable” for the claimants not to have accepted the first part 36 offer – the judge said it led “to the inescapable conclusion that this case plainly sits outside the norm”.

He continued: “These features also paint the claimants in an extremely poor light indeed. The justice of the case demands not only that the claimants do not recover any of their own costs, given the true factual basis compared to their pleadings, but also that the court reflects its disapproval of the claimants pleading ‘facts’ so directly contrary to the true situation, as was done in answer 22 of the further information served on 13 March 2020.”

At the same time, the judge noted that, “notwithstanding the tiny amount of money awarded as damages, Canham was found to have been negligent in certain respects” and he decided that there should be no order for costs at all, in either party's favour, up to the date of the service of the further information on 13 March 2020. Thereafter, Canham should recover all of its costs on the indemnity basis.

“This reflects the stark fact that, from that date onwards, the claimants were conducting the litigation on a wholly false factual basis, something that must have been known to the directors of both the claimant companies.”

Canham had an approved costs budget of £637,000 for the whole action (the claim form was issued in June 2019) but this had “less relevance” than it would have done if detailed assessment was to be done on the standard basis. Foxton J ordered the claimants to pay £500,000 on account of costs.

Helena White (instructed by Birketts) for the claimants. Rupert Higgins (instructed by Reynolds Colman Bradley) for the defendant.

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