Ontulmus & Ors v Collett & Ors

Where claims settle but costs remain disputed, the court should determine costs under its statutory and procedural discretion, applying common sense and avoiding an unnecessary trial of the underlying merits. A very limited damages recovery may justify no costs before a settlement deadline, while unreasonable continuation after that deadline may justify indemnity costs. Parties advancing a common case may be jointly and severally liable for common costs, but not for costs caused solely by another party’s separate claim. Set-off depends on equitable connection between the liabilities.

The claimants brought libel proceedings against three defendants concerning emails sent in 2012. Before the listed case management conference, they accepted settlement offers made by the third defendant, Mr Moore. The offers required payment of damages and left costs for determination. The claimants also discontinued their claims against the first and second defendants.

The court determined the consequential orders, including costs allocation and basis, joint and several liability, enforcement and set-off of damages, the costs of an earlier strike-out application, and the costs consequences of discontinuance.

1. Settlement and damages. The proceedings were stayed, subject to enforcement of the orders. Judgment was entered for Mr Ontulmus (£75,000), Kaiserwerft (£25,000) and MTH (£500). The Part 36 settlements required payment within 14 days; the non-Part 36 settlement created the same contractual obligation.
2. MTH’s costs. The court applied the approach in Brawley v Marczynski [2002] EWCA Civ 756, as qualified by BCT Software Solutions Ltd v C Brewer & Sons Ltd [2003] EWCA Civ 939 and Venture Finance Ltd v Mead [2005] EWCA Civ 325. It declined to determine allegations that MTH lacked a trading reputation or that its licence agreement was fraudulent. The £500 recovery was nominal and carried no costs. MTH was liable for Mr Moore’s costs from 4 December 2013.
3. Part 36 costs. Mr Moore was liable for Mr Ontulmus’s and Kaiserwerft’s costs up to 3 December 2013, and they were liable for his costs thereafter. Their post-deadline conduct was highly unreasonable and outside the norm, justifying indemnity assessment under the principles reviewed in Esure Services v Quarcoo [2009] EWCA Civ 595, Reid Minty v Taylor [2001] EWCA Civ 1723 and Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson & Ors [2002] EWCA Civ 879. No finding of fraud or dishonesty was made.
4. Common costs. The claimants were jointly and severally liable for Mr Moore’s common costs incurred from 4 December 2013. Costs caused solely by one claimant’s separate claim remained that claimant’s sole responsibility.
5. Set-off and enforcement. The court recognised power under section 51 of the Senior Courts Act 1981 and CPR 44.12 to address set-off. Set-off of damages against costs was potentially equitable, but was deferred because assessment, funding arrangements and third-party interests could affect the net position. A temporary, time-limited stay on enforcement of the damages was granted, with liberty to apply.
6. Other costs. Mr Moore was ordered to pay Mr Ontulmus’s and Kaiserwerft’s costs of the strike-out application. The first and second defendants obtained the standard costs consequences of discontinuance.