Dee v Telegraph Media Group Ltd

An indemnity costs order requires conduct that is out of the ordinary and takes the case out of the norm. A party’s unsuccessful or opportunistic case, criticism of litigation strategy with hindsight, or the existence and potential effect of a conditional fee agreement does not, without more, justify indemnity costs. The court must distinguish costs consequences arising from the funding arrangements from conduct sufficiently unreasonable in the particular case. Where the defendant is the clear overall winner, the usual order is costs on the standard basis, unless the circumstances justify an issue-based or proportionate order.

The defendant had obtained summary judgment in the underlying libel proceedings. The court was required to determine the consequential costs order without a hearing. The defendant sought all its costs on the indemnity basis, alleging obfuscation in the pleadings and correspondence, a tactical decision to limit the claim to a front-page article, and the use of costs pressure connected with conditional fee agreements and after-the-event insurance.

The claimant sought an issue-based order or, alternatively, a reduction in the proportion of costs payable. The central issue was whether the conduct relied on took the litigation out of the norm.

1. Indemnity basis. The defendant’s criticisms did not establish conduct sufficiently out of the ordinary to justify indemnity costs. Argument in pleadings, preparation of evidence on issues later resolved summarily, and pursuing a claim that was struck out were insufficient in the circumstances.
2. The court should distinguish between the consequences of entering into a conditional fee agreement, including its potential effect on the parties, and conduct that is sufficiently unreasonable in the particular case. Both parties had lawyers acting under conditional fee agreements, and information about those agreements and after-the-event insurance had properly been exchanged.
3. The unsuccessful strategy of suing only on the front-page article was criticised with hindsight. The claimant’s high costs estimate was not, by itself, enough to take the case out of the norm, particularly in the absence of evidence that unreasonable costs were actually sought during settlement attempts.
4. The defendant was the clear overall winner and was therefore entitled to its costs of the action on the standard basis, to be assessed if not agreed. An issue-based order and a reduction to 60 per cent were refused because the finding favourable to the claimant on the defamatory-meaning issue was heavily qualified and was not made on the basis advanced by him.
5. There was no order as to costs of the discrete costs application. The defendant’s indemnity-costs application was refused, but the claimant’s alternative application concerning the appropriate costs order was also refused.

The judgment records that the defendant had previously obtained summary judgment in the underlying proceedings: [2010] EWHC 924 (QB). This judgment determined the consequential costs issues.