Noorani v Calver (No 2 Costs)

An indemnity costs order is justified where conduct is unreasonable to a high degree and takes the case out of the norm. The court considers all the circumstances, including pre-action conduct, settlement offers, the reasonableness of pursuing the claim and the manner in which it was conducted. A hopeless claim knowingly maintained despite compelling evidence may warrant indemnity costs. The court may also order a substantial interim payment on account of costs.

The claimant brought libel proceedings arising from a letter concerning silent and malicious telephone calls. On the third day of trial he discontinued the claim. The defendant sought indemnity costs and an interim payment on account.

The issues were whether the conduct of the parties and the nature of the claim justified indemnity costs, and what interim payment should be ordered.

1. Indemnity costs. The claimant was ordered to pay the defendant’s costs on the indemnity basis. Under CPR 44.3, the court had to consider all the circumstances, including conduct before and during proceedings, the reasonableness of pursuing allegations and the manner in which the case was conducted. Conduct had to be unreasonable to a high degree; mere error or misguided conduct in hindsight was insufficient.
2. The case was outside the norm. The defendant had made reasonable offers which would have achieved the same or a better outcome for the claimant, but the claimant maintained the proceedings despite evidence seriously undermining the claim. The claimant’s rejection of the February 2008 offer alone could justify indemnity costs. The approach was consistent with Reid Minty v Taylor, Kiam v MGN Limited No 2 and Excelsior Commercial and Industrial Holdings Limited v Salisbury Hammer Aspden and Johnson.
3. The underlying claim supplied an independent reason. The proceedings were used for ulterior purposes, involved unjustified personal attacks and were hopeless from the outset. The principles illustrated by Amoco (UK) Exploration v British American Offshore Limited, Clark v Associated Newspapers and Wates Construction Limited v HGP Greentree Alchurch Evans Limited supported the order.
4. Applying CPR 44.3(8), the court ordered an interim payment of £50,000 within 14 days on account of costs estimated at about £100,000. The claimant’s financial difficulties did not justify a lower payment. The judge’s observations about conditional fee agreements were wider observations and were not necessary to the order.