Hickman v Lapthorn

The usual rule remains that costs follow the event, but the court may adjust costs where a party has pursued an unreasonable issue or acted unreasonably in relation to settlement. A refusal to mediate or negotiate is assessed by the same test of reasonableness. Relevant factors include the party’s reasonable assessment of the merits, the cost of mediation, and whether mediation had a reasonable prospect of success. The possibility of saving costs compared with the sum in issue may be relevant, but must be approached carefully. It cannot justify forcing a party to pay more than a claim is worth merely to avoid a costs sanction.

The claimant had succeeded in a negligence claim against solicitors and counsel arising from advice to settle a serious road-accident claim at too low a value. Judgment had been entered for £130,000, with liability apportioned one third to the solicitors and two thirds to counsel. The present judgment concerned costs.

The claimant sought his costs, subject to limited deductions. The defendants argued that unsuccessful issues, expert evidence and the claimant’s conduct should reduce his recovery. The first defendant also sought to make the second defendant liable for additional costs incurred because the second defendant had refused mediation and declined to negotiate. The central issues were the proper treatment of failed issues and whether that refusal was unreasonable.

1. Costs between claimant and defendants. The claimant was the successful party and the general rule applied. The unsuccessful care claim, the abandoned EEC Directive issue, the issue concerning the prospects against the Motor Insurers Bureau and peripheral allegations did not justify a broader reduction because they added little to the trial or costs and were not unreasonably pursued. The claimant was ordered to pay the defendants’ costs of Mrs Gough’s reports and related joint work, and could not recover three quarters of the costs of Dr Herbert’s reports.
2. Mediation and negotiation. The principles in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 applied. The burden was on the party seeking a costs departure to show that the refusal was unreasonable. A reasonable belief in a strong case was relevant, as were the cost and prospects of mediation and any encouragement by the court. A party could not be required to mediate, and the possibility of protecting costs through Part 36 did not answer the issue.
3. The same reasonableness test applied where the dispute was between defendants and concerned both mediation and ordinary negotiation. The second defendant’s valuation and assessment of the merits had been formed by experienced advisers and could not be described as unreasonable. Its refusal to pay more than it considered the claim to be worth, despite the possible saving in costs, was a legitimate stance because otherwise costs pressure could extract an unmerited settlement.
4. The applications for the second defendant to bear the claimant’s or first defendant’s additional costs after 28 July 2005 therefore failed. The agreed order that the second defendant pay the first defendants’ contribution-proceedings costs from 28 January 2005 on an indemnity basis was approved.