Deleclass Shipping Co Ltd & Anor v Ingosstrakh Insurance Company Ltd (Costs)

Summary assessment of costs requires a broad evaluation of the work reasonably required, the issues contested, the evidence, the claim’s value and the consequences of the application. Costs should be allocated between related applications by reference to the work actually undertaken, rather than simply by comparing oral hearing time. An indemnity basis is justified only where the conduct or arguments fall outside the norm; an argument may be wrong without being so plainly unmeritorious as to warrant indemnity costs. Mutual costs liabilities may be set off under Civil Procedure Rules 1998, rule 44.12.

The court had previously dismissed both parties’ applications for security for costs. The parties were unable to agree the costs of those applications and asked the court summarily to assess them.

The defendant’s application generated substantially more evidence and submissions. The claimants sought £33,022.81 for responding to it. The defendant sought £16,879.22 for responding to the claimants’ application, together with indemnity costs on the basis that the claimants’ construction argument was unarguable. The issues were the reasonable assessment and allocation of costs, the appropriate basis of assessment, and the treatment of the resulting liabilities.

1. The claimants’ costs of the defendant’s unsuccessful security-for-costs application were assessed at £29,000. The court accepted the proposed allocation of work as reasonable and considered the overall bill broadly reasonable, having regard to the nature and value of the application and the risk that the claim might be stifled. Some expenditure, particularly costs incurred after the hearing and witness-statement costs, was excessive, but the witness evidence was not disallowed merely because it set out the claimants’ position or overlapped with counsel’s submissions.

2. The defendant’s costs of the claimants’ unsuccessful application were assessed at £12,000. The court considered that the defendant’s allocation of certain evidence understated the work attributable to that application, and assessed the costs in the round.

3. Although the claimants’ argument that the defendant was making a claim against them was wrong, it was advanced in unusual circumstances because the defendant had substantially adopted contentions previously advanced as a counterclaim by the former Part 20 defendant. The argument was therefore not so clearly lacking in merit as to fall outside the norm. Indemnity costs were refused.

4. The two costs liabilities were directed to be offset against each other pursuant to CPR 44.12. The defendant was directed to pay the net sum of £17,000 to the claimants within 28 days.

The judgment itself records an earlier judgment dated 9 March 2018 dismissing both parties’ applications for security for costs. No appellate decision is stated.