Lloyd v Svenby

A claimant who brings an unsuccessful claim will ordinarily pay its costs. The court may depart from that starting point to reflect the conduct of the litigation, the parties’ offers, late amendments, or costs attributable to particular steps. Indemnity costs require sufficiently unreasonable or improper conduct, including pursuit of an unfounded serious allegation, legally groundless relief, or refusal of a reasonable settlement offer. Interest may be awarded on costs from the date the receiving party paid its solicitors’ bills. An interim payment on account may be ordered even where the final costs figure remains to be assessed.

The judgment concerned costs following the dismissal of the claimant’s claim and the first defendant’s counterclaim. The claimant sought costs or, alternatively, costs relating to particular procedural steps. The first defendant sought his costs on an indemnity basis, interest on sums paid to his solicitors, and an interim payment on account.

The issues were the appropriate incidence and basis of assessment of costs, the effect of a late amendment raising non-justiciability, responsibility for a second vehicle inspection, interest on costs, and the appropriate interim payment.

1. The ordinary starting point was that the party bringing an unsuccessful claim should pay the costs of that claim. The court saw no substantial reason to depart from that result. The claimant was therefore ordered to pay 80 per cent of the first defendant’s costs, subject to the separate order concerning the second inspection.

2. The late pleading of non-justiciability justified an adjustment because an earlier preliminary-issue hearing might have saved costs. The costs of the counterclaim were negligible. The claimant’s opposition to the second inspection was reasonable, and the inspection had been unhelpful to the first defendant. The first defendant was accordingly ordered to bear the costs of and occasioned by that application and inspection. No special order was made for the final day of evidence.

3. Applying the guidance in Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879, the first defendant’s costs were to be assessed on an indemnity basis. Relevant matters included the disproportion between costs and what was at stake, the unfounded serious allegation of malicious falsehood, the lack of legal foundation for the injunction, and persistence in the proceedings despite a reasonable settlement offer.

4. Following the guidance in Bim Kemi AB v Blackburn Chemical [2003] EWCA Civ 889 at [18(c)], the claimant was ordered to pay interest at one per cent above base rate from the date on which the first defendant paid each solicitor’s bill, on 80 per cent of the amount paid.

5. An interim payment on account was appropriate. The claimant was ordered to pay, within 28 days, 40 per cent of the costs paid by the first defendant to his solicitors. If the amount could not be agreed, it would be determined on written submissions and evidence.

The judgment followed an earlier judgment dated 27 February 2006 dismissing both the claim and the counterclaim. No appeal history was stated.