Siegel v Pummell

An order for costs on the indemnity basis requires conduct or circumstances taking the case out of the norm. The conduct must be unreasonable to a high degree; mere error or misguided conduct viewed with hindsight is insufficient. The court retains a broad discretion and should assess the whole circumstances, including the parties’ conduct and the manner in which the litigation was pursued. Serious shortcomings by an expert which require the opposing party to recall an expert may justify indemnity costs for the costs thereby occasioned. Where difficulties in a court-ordered joint statement process arise from mutual intransigence, the resulting costs may appropriately be awarded on the standard basis.

The claimant had obtained judgment against the defendant. Costs had been ordered on the standard basis, with the claimant’s applications for indemnity costs and an additional payment under CPR 36.14(3)(d) reserved for determination. The claimant did not pursue the additional payment, and the defendant did not seek permission to appeal.

The claimant sought indemnity costs from September 2014, relying on alleged personal attacks by the defendant’s expert, obstruction of the joint statement process, improperly framed allegations of dishonesty, late evidence, and the expert’s final written statement. The court also had to determine costs reserved when the joint statement process was abandoned.

1. Indemnity costs principles. Costs are discretionary under CPR 44. The standard basis is the default. An indemnity order removes proportionality as a requirement and reverses the usual benefit of doubt on assessment. The Court of Appeal authorities establish that the court should not attempt an exhaustive definition of the circumstances justifying indemnity costs. The critical requirement is conduct or a circumstance taking the case out of the norm. Such conduct must be unreasonable to a high degree, rather than merely wrong or misguided in hindsight.
2. Personal attacks and expert evidence. The defendant’s expert had been combative and dismissive towards the claimant’s expert. Nevertheless, the matters raised concerning that expert’s dual role, professional expertise and regulatory status were properly available to the defendant. The unpleasant atmosphere fell significantly short of the required threshold.
3. Joint statement process. Difficulties arose from the mutual attitudes of both experts. Both sides’ solicitors had genuinely attempted to advance the process, and the court’s decision to dispense with it was unsurprising. The defendant’s conduct therefore did not justify indemnity costs.
4. Other complaints. The defendant had not alleged that the claimant was dishonest or fraudulent. The late Hewlett Packard witness statements were justified by the circumstances, and no objection had been taken to the witnesses giving evidence. Neither matter warranted indemnity costs.
5. Final written statement. The defendant’s expert was required to provide a written statement during his evidence explaining the basis of his opinion. This represented serious shortcomings, required the claimant to recall an expert, and was conduct sufficiently out of the norm to justify indemnity costs. The indemnity order was limited to the costs of that recall.
6. The costs of the application concerning the abandoned joint statement process were awarded to the claimant, but on the standard basis, reflecting the mutual intransigence and the outcome of the litigation.