Wales (t/a Selective Investment Services) v CBRE Managed Services Ltd & Anor

The unsuccessful party ordinarily pays the successful party’s costs, but the court may make a different order having regard to all the circumstances, including pre-action conduct, conduct during proceedings and settlement offers. An unreasonable refusal or failure to engage in mediation may justify a substantial costs reduction, even where the refusing party succeeds at trial. The Halsey factors include the nature and merits of the dispute, other settlement attempts, proportionality of ADR costs, delay or prejudice, and the prospects of success. A successful party may also lose costs where its earlier position materially obscured the issues and caused wasted expenditure. Indemnity costs require conduct sufficiently outside the norm; ordinary criticism or unsuccessful allegations do not necessarily meet that threshold.

The claimant’s substantive claims against CBRE Managed Services Ltd and Aviva Administration Limited had been dismissed after trial in a judgment handed down on 8 January 2020. The present hearing concerned costs.

The claimant argued that CBRE had unreasonably refused mediation and that Aviva’s initial case had caused unnecessary costs by asserting a contractual relationship which it later denied. CBRE and Aviva sought their costs, indemnity costs, and interim payments on account. The issues were the appropriate costs allocation, the basis of assessment and the amount of any interim payments.

1. Costs discretion. Under Civil Procedure Rules 1998, r 44.2, the unsuccessful party ordinarily pays the successful party’s costs, but the court must consider all the circumstances, including conduct before and during proceedings, the reasonableness of pursuing issues and admissible settlement offers.
2. CBRE and mediation. Applying Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002, the court considered the nature and merits of the dispute, settlement efforts, ADR costs, possible prejudice from delay and the reasonable prospects of mediation. The dispute was suitable for mediation, the costs were proportionate and there was a reasonable prospect of settlement. CBRE’s repeated refusal or failure to engage was unreasonable. CBRE’s costs were therefore reduced by 50 per cent before 14 February 2019 and by 20 per cent from 17 June 2019.
3. Aviva’s conduct. Aviva had initially asserted or encouraged an impression that it was contractually liable and that CBRE had terminated the claimant’s services in 2012. Its later amendment materially altered the issues and caused wasted costs. Aviva was therefore deprived of 20 per cent of its costs up to and including 3 May 2019. Its refusal to mediate without CBRE was reasonable.
4. Indemnity costs. The claimant’s pleaded case, allegations of dishonesty and failure to pursue a subject-to-contract offer were open to criticism but did not take the case out of the norm. Costs were ordered on the standard basis.
5. Orders. The claimant was ordered to pay the defendants’ costs subject to the stated reductions and detailed assessment. Interim payments on account were ordered in the sums of £63,000 to CBRE and £72,000 to Aviva, payable within 14 days.

The judgment followed the court’s earlier trial judgment of 8 January 2020, which dismissed the claimant’s claims against both defendants. The present judgment determined costs only.