D Pride & Partners v Institute for Animal Health & Ors

Where a claimant settles for no more than a defendant’s Part 36 offer, the court should ordinarily give the offer its prescribed costs consequences. A settlement exceeding the claimant’s legal entitlement is not necessarily a judgment more advantageous for the purposes of Part 36. The court must consider all the circumstances, including the offer’s terms, timing, available information and the parties’ conduct.

Costs consequences should not penalise parties for abandoning points after reviewing their merits. Nor should separate representation be treated as duplication where parties have materially different factual or legal interests in novel and substantial litigation. Indemnity costs for excessive bundles require a proportionate assessment of the whole case.

The proceedings arose from claims by livestock farmers concerning the escape of foot-and-mouth disease virus from the Pirbright facilities. The claims alleged negligence, private nuisance and liability under the rule in Rylands v Fletcher.

The claims of the first to seventh claimants were settled after Part 36 offers and the claims of the eighth to fourteenth claimants were dismissed in an earlier judgment, [2009] EWHC 685 (QB). The court therefore determined costs, interim payments, interest and the claimants’ objections concerning the statutory regime, Marcic v Thames Water, Stovin v Wise, duplicated representation and extensive hearing bundles.

1. First to seventh claimants. The Part 36 offers made before proceedings were sufficient offers to settle. The defendants were not required to admit liability where the dispute concerned compensation and liability between the defendants remained in issue. The settlement did not produce a judgment more advantageous within CPR Part 36.14 merely because it may have exceeded the claimants’ strict legal entitlement. It was unjust to deprive the defendants of the prescribed costs protection. The first to seventh claimants therefore had to pay the defendants’ costs, subject to the earlier consent order.
2. The court had not decided the merits of the statutory regime or Marcic v Thames Water point as against the settled claims. No separate costs order was appropriate in relation to that issue.
3. Eighth to fourteenth claimants. The defendants were the successful parties. No separate costs order was justified in respect of the statutory regime, Marcic v Thames Water or Stovin v Wise. Parties should be encouraged to keep points under review and to omit arguments which are no longer necessary or appropriate.
4. The defendants’ separate representation did not amount to unreasonable duplication. Their factual and legal positions differed, and the claim was novel, substantial and potentially of very wide financial significance. The defendants were not deprived of costs on that ground.
5. The claimants’ written submissions and authorities bundles went beyond what a proper skeleton argument should contain. Nevertheless, considering the matter in its totality, an indemnity costs order for the bundles would be disproportionate. The claimants were not entitled to recover their costs.
6. Interim payments on account were ordered in the sums sought: £250,000 to IAH, £510,000 to Merial and £60,000 to DEFRA. Interest on costs was awarded at base rate plus 1% until judgment interest began. Following Colourquest v Total, the commencement of judgment interest under CPR 40.8 was postponed by four months.

This was a first-instance costs judgment. The judgment records the earlier dismissal of the eighth to fourteenth claimants’ claims in [2009] EWHC 685 (QB).