Ford & Anor v Bennett & Anor

Indemnity costs require conduct or circumstances taking the case out of the norm. A long-delayed claim based on an alleged oral agreement may satisfy that threshold where parties jointly advance a speculative case without careful evaluation. The court need not find dishonesty against every party if their claims are interdependent and they have made common cause. Proportionality is not a test under the indemnity regime, although it may be a relevant consideration. An appellate court should respect a trial judge’s careful evaluative discretion where the correct test was applied and no material error is shown.

After a 12-day Chancery Division trial, a deputy judge rejected the defendants’ alleged 2002 oral partnership agreement concerning a football club and its ground: [2018] EWHC 1931 (Ch). The judge ordered the defendants to pay the claimants’ costs, assessed on the indemnity basis. The additional parties appealed only against that basis, arguing that they had not been found dishonest, had not advanced a case outside the norm, and had been wrongly treated as sharing responsibility with another defendant. The central issue was whether the judge had erred in principle or fact when exercising his costs discretion.

1. Disposition. Sir Bernard Rix, with whom Lord Justice Baker agreed, dismissed the appeal. The indemnity-costs order remained in force.
2. Applicable test. The governing test was that indemnity costs require conduct or circumstances taking the case out of the norm. The critical requirement was identified in Excelsior Commercial & Industrial Holdings Limited v Salisbury Hammer Aspden & Johnson [2002] EWCA 879, [2002] CP Rep 67. The court should not add requirements to the CPR beyond its terms. The costs order also had to be fair and reasonable, reflecting Reid Minty v Taylor [2002] 1 WLR 2800.
3. Application to the additional parties. The alleged agreement had been asserted only after prolonged inactivity and had been found to be a fiction. The case was not merely one of mistaken witnesses or poor memory. It was a speculative enterprise requiring careful attention and testing. The additional parties adopted the same pleaded case as Wayne Bennett, relied materially on common evidence, and could not effectively run their case without him. The trial judge was therefore entitled to treat them as making common cause, even though the strongest criticisms concerned Wayne and his witnesses. Individual findings of dishonesty, collusion, or knowledge that the claim was bad were not prerequisites.
4. Proportionality and appeal. Under the modern indemnity-costs regime there was no proportionality test, as recognised in Easyair Ltd (t/a Openair v Opal Telecom Ltd [2009] EWHC 779 (Ch), [2009] 6 Costs LR 882 and Rawlinson & Hunter Trustees S v ITG Ltd [2015] EWHC 1924 (Ch). Proportionality and costs-budget consequences could nevertheless be considered. The matters challenged on appeal were evaluative judgments rather than material errors of fact undermining the discretion. The Court of Appeal declined to substitute its own evaluation for that of the trial judge.

Appellate history

1. Court of Appeal (Civil Division). The appeal against indemnity costs was dismissed on 3 October 2019.
2. High Court of Justice, Chancery Division. Following a 12-day trial, the deputy judge rejected the alleged oral partnership agreement and ordered the defendants’ costs to be assessed on the indemnity basis in [2018] EWHC 1931 (Ch).