Igloo Regeneration (GP) Ltd & Ors v Powell Williams Partnership

An indemnity costs order requires conduct or circumstances taking the case outside the ordinary run of litigation. The mere fact that a party lost, even decisively, is insufficient. Relevant conduct may include pursuing a case after its evidential difficulties have become obvious, wasting substantial costs and court resources, and unjustifiably refusing settlement at a figure the party itself had previously offered. The order may properly apply from a defined date when the conduct became unreasonable, while costs incurred before that date remain payable on the standard basis.

The claimants had lost a professional negligence claim against the defendant concerning alleged failures in surveying and reporting. The court had ordered judgment for the defendant in the substantive proceedings. The issue addressed in this judgment was the appropriate basis and period for costs.

The claimants accepted liability for the defendant’s costs on the standard basis. The defendant sought indemnity costs, relying on the claimants’ conduct after evidential difficulties had emerged, their approach to settlement, and the continuation of proceedings after an adjourned trial.

1. Indemnity costs. The court held that the claimants’ loss of the substantive claim did not, by itself, justify indemnity costs. The applicable question was whether the conduct of the action or the circumstances took the case outside the norm in a way warranting indemnity costs, as illustrated by Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson (a firm) [2002] EWCA Civ 879 and the other authorities referred to.
2. The claim had initially been arguable and had proceeded in the ordinary way. However, after the first trial hearing, the claimants faced obvious and substantial difficulties arising from concessions in their expert evidence and comments made by the trial judge. Their subsequent evidence appeared to retreat from earlier concessions. Their quantum expert had also provided figures without transparent reasoning, materially undermining confidence in that evidence.
3. The parties’ negotiations did not themselves warrant criticism. The significant factor was that the claimants had offered to settle at £729,500 plus costs, but later refused the same figure when offered by the defendant. Nothing material had changed. Continuing the litigation thereafter wasted time, costs and court resources and was unjustifiable having regard to the overriding objective, which bound the parties as well as the court.
4. Indemnity costs were therefore ordered from the Monday following the hearing before His Honour Judge Halbert. Costs up to that date were payable on the standard basis.
5. Permission to appeal was refused. The proposed grounds challenged findings of fact and the assessment of witness and expert reliability, without alleging any failure in the fact-finding process. There was no realistic prospect of success.

The judgment records that the substantive claim had been due to proceed before His Honour Judge Halbert, was adjourned, and was later transferred to the Technology and Construction Court in London. This judgment determined the consequential costs issue and refused permission to appeal.