competition

Civil Litigation is not for the faint-hearted, nor the easily offended. It is far from civil in one sense of that term: It is a process which is often, by its nature, fraught with accusations thrown by one side at another which call into question a person’s basic honesty. It is invariably high stakes, both financially and reputationally, and parties will resort to every trick in the book (or the Civil Procedure Rules) to achieve any conceivable advantage over their opponent.

Because of the competitive nature of litigation, and the need to discourage parties from overstepping the mark in terms of their behaviour towards each other in the conduct of proceedings, the courts have a discretion as to which side should pay the costs of the action, and the ability to punish unacceptable behaviour by the imposition of costs penalties. This is commonly by way of orders that one side (even if they have won their case overall) pay their opponent’s costs in connection with an aspect of the proceedings on the ‘indemnity’ rather than the ‘standard’ basis. When assessing costs on the standard basis, the court will only allow costs which are proportionate to the matters in issue, and will resolve any doubt as to whether particular costs have been reasonably or proportionately incurred in favour of the paying party. In contrast, the court does not need to consider proportionality when assessing costs on the indemnity basis, and it will resolve any doubt as to whether costs have been reasonably incurred in favour of the receiving party.

There are a number of reasons why the court may decide to award costs on the indemnity basis. But how bad does one side’s conduct need to be? A recent High Court decision re-visited the types of question that the court will ask, and reflected not just on the conduct of the litigants themselves, but that of their experts who, contrary to what one might usually expect, appear to have been at loggerheads to the sort of extent normally associated with the litigants themselves.

In a case involving conflicting evidence advanced by a number of medical experts*, the judge was invited to order indemnity costs to the claimant owing to the way in which the defendant’s expert had engaged in what were said to be personal attacks against the claimant’s medical experts. The judge acknowledged (in what may be an example of classic judicial understatement) ‘a degree of animus’ between the experts and described ‘an unpleasant edge to the proceedings by virtue of the attitude, principally of [one expert] towards [another]’. However, he felt that such conduct still fell significantly below the level of unacceptable conduct which would justify an order for indemnity costs.

The judge reviewed the principles governing an award of indemnity costs, namely that the conduct in question would need to be unreasonable to a high degree, and not merely wrong or misguided in hindsight. Critically, there must be some conduct or circumstance which takes the case ‘out of the norm’. In the case described above, indemnity costs were ultimately awarded, not in respect of the experts’ behaviour towards each other (which was equally deserving of criticism), but because of serious shortcomings in the way in which the defendant’s expert approached the giving of his evidence (which led to the Claimant’s expert having to be recalled).

The case serves as a reminder that the Court has a wide discretion in respect of costs, and that the Court of Appeal has historically declined to define the precise circumstances in which a penal order for indemnity costs will be made. Litigants should bear in mind that aggressive conduct, particularly involving serious accusations or aspersions which are made lightly and without proper foundation, may have financial consequences which outweigh the more immediate emotional impact which is being sought to be achieved.

For more information, email blogs@gateleyuk.com.

*Siegel v Pummell [2015] EWHC 195 QB


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.