CG Group Ltd v Breyer Group Plc

Indemnity costs require conduct sufficiently unreasonable to justify departing from the standard basis. A party does not act unreasonably merely by advancing a weak jurisdictional challenge where an accompanying natural justice challenge has some merit. Settlement offers concerning the parties’ final account under an underlying contract carry limited weight in adjudication enforcement proceedings unless directed to settling those proceedings. Costs are assessed proportionately, having regard to the complexity and value of the dispute, the work reasonably required, and the appropriate level of representation.

The claimant had obtained judgment enforcing an adjudicator’s decision in its favour in the earlier proceedings, reported as [2013] EWHC 2722 (TCC). The remaining issue was the claimant’s costs. The court had to determine whether costs should be assessed on the indemnity basis and, if assessed summarily on the standard basis, the amount recoverable.

1. The defendant had not acted unreasonably in raising and maintaining its jurisdictional and natural justice defences. Although the jurisdictional challenge was weak, the natural justice challenge had some merit. The adjudicator had been entitled to proceed on the basis that he could have regard to the payment terms because the defendant had relied on those terms in its response.
2. The defendant’s further written submissions after the hearing were unfortunate and increased costs, but the point addressed had been raised in the claimant’s oral reply and the conduct did not justify indemnity costs.
3. The claimant’s settlement offers did not justify indemnity costs. They concerned full and final settlement of the parties’ wider account and disputes under the project, rather than the pending adjudication enforcement proceedings. An adjudicator’s decision is temporarily binding, but is not final until revised or set aside through the final dispute resolution process. Offers directed specifically to the enforcement proceedings could have been relied upon in seeking indemnity costs.
4. Costs were therefore payable on the standard basis. Allowing for VAT considerations, the court assessed the claimant’s recoverable costs overall at £18,000, reflecting the limited complexity and value of the proceedings, the reasonable time required, appropriate counsel costs, and the limited post-hearing exercise.
5. The summary assessment of £18,000 was payable within 14 days.

First-instance costs judgment following the court’s earlier enforcement judgment, [2013] EWHC 2722 (TCC).