Dunlop Haywards (DHL) Ltd v Erinaceous Insurance Services

The court’s discretion under Civil Procedure Rules 1998, rule 36.14(3), must be exercised by considering all the circumstances and the factors in rule 36.14(4). A Part 36 enhancement should be assessed in the round, having regard to the offer’s terms, value and timing, the information available, the parties’ conduct and the practical incentive to settle. Costs orders should reflect the substance and reality of the litigation. A substantial disparity in responsibility may justify a significant reduction in costs recovery after a partial contribution success.

This was a consequential costs and interest judgment following the court’s substantive judgment of 19 November 2009. The claimant sought interest and costs from HPC, an interim payment, and directions concerning the costs of the Excess Insurers and the Part 20 claim involving Forbes. The court determined the period and rates of interest, the consequences of the claimant’s successful Part 36 offer, whether the Excess Insurers should receive a Bullock order, whether issue-based reductions were appropriate, and the amount of costs recoverable by HPC from Forbes.

The court made the following orders and findings.

1. Interest on damages. Interest payable by HPC ran from 14 July 2007, when the court considered that the excess insurers’ liability was sufficiently clear and a reasonable period for payment had expired.
2. Part 36. Under rule 36.14(3) of the Civil Procedure Rules 1998, the claimant had beaten its offer. The discretion was to be exercised by considering all the circumstances, including the matters in rule 36.14(4). The court rejected fixation on particular rates and assessed the enhancement by considering the figures, the offer’s value, the information available, the parties’ conduct and the settlement incentive. It awarded interest on damages at 4 per cent above the base rate from 9 February 2009.
3. Costs payable to the claimant. The claimant was entitled to indemnity costs from 9 February 2009, with interest on those costs at 2 per cent above base rate. An interim payment of £1 million was ordered within 28 days. Any detailed challenge concerning aggregation and quantum costs was left to detailed assessment.
4. Excess Insurers. The application for a Bullock order was refused. The court held that the substance and reality of the proceedings showed that HPC had pursued the rectification and construction arguments. The Excess Insurers’ costs were therefore payable by HPC. No percentage reduction was made for issue-based points or expert evidence, because the successful issues were sub-issues of issues on which HPC ultimately failed and the evidence had not been unnecessarily incurred by the Excess Insurers.
5. Forbes. Forbes was not required to contribute to the costs HPC had to pay to the claimant or the Excess Insurers. HPC was, however, the successful party on its Part 20 claim for the purpose of rule 44.3(2), but its recovery was reduced by 50 per cent. The reduction reflected HPC’s primary responsibility for the loss, Forbes’s success on significant issues, and the partial nature of HPC’s recovery. Interest on those costs was payable at 1 per cent above base rate, with an interim payment of £200,000 within 28 days.
6. Permission to appeal was refused.

not stated in the judgment.