Dixon & Anor v Radley House Partnership & Ors

An indemnity costs order requires conduct or circumstances taking the case away from the norm. The weakness of a party’s position, including a point close to being unarguable, is relevant but will not ordinarily suffice by itself. The court must focus principally on conduct rather than the losing party’s substantive merits.

A party who serves a conventional defence while reserving a point that the proceedings are invalid, and later seeks to spring that point by amendment, may engage in conduct beyond the norm. Different defendants may properly receive different costs orders where their conduct differs. The complexity created by different bases of assessment may make summary assessment inappropriate, while an interim payment can still be ordered.

The claimants applied for the costs of an unsuccessful application by the defendants to amend their defences. The amendment application had been refused in an earlier judgment, [2016] EWHC 2511 (TCC).

The claimants sought indemnity costs, detailed assessment and an interim payment. The court considered separately the conduct of Radley House Partnership (RHP) and Chris Reading & Associates (CRA), including the defendants’ reliance on a point said to render the proceedings ineffective.

1. Indemnity costs. The applicable principles were those stated in Van Oord v All Seas Ltd [2015] EWHC 3385 (TCC), including the guidance drawn from Elvanite Full Circle Ltd v AMEC Earth & Environmental (UK) Ltd [2013] 4 Costs LR 612. The court must identify conduct or circumstances taking the case away from the norm. A weak or unsuccessful point is not ordinarily enough, although the degree of badness may be relevant.
2. The court should focus principally on conduct rather than simply the merits. Proportionality is removed from the assessment once indemnity costs are ordered, leaving the paying party with the burden of persuasion on reasonableness. The relevant principles were reflected in the guidance concerning Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson [2002] EWCA Civ 879, Simms v Law Society [2005] EWCA Civ 849 and Easy Air Ltd v Opal Telecom Ltd [2009] EWHC 779 (Ch).
3. CRA had adopted a thoroughly bad point after RHP raised it. That conduct remained within the norm and did not justify indemnity costs. RHP, by contrast, had decided to run the point, served an entirely conventional defence, and waited before asserting that the proceedings were not properly constituted. Serving that defence acknowledged or represented that the proceedings were valid. The conduct was beyond the norm and involved significant unreasonableness or inappropriate conduct.
4. The case was materially different from Ace v Seechurn [2002] EWCA Civ 67; [2002] 2 Lloyd’s Rep 390, where a defendant could take a limitation point while time ran provided the claimant was not misled or entrapped. RHP’s conduct justified indemnity costs for the application. CRA was liable on the standard basis.
5. The court declined summarily to assess costs because applying different bases created additional complexity. It ordered an interim payment, provisionally £10,000 from RHP and £10,000 from CRA.