Jagger v Holland

Indemnity costs are discretionary and depend on all the circumstances. A time-limited settlement offer, failure to engage in directed alternative dispute resolution, and unsatisfactory evidence may justify refusing indemnity costs, even where the offer warned that they might be sought. Where several parties actively pursue an unsuccessful allegation against another party, responsibility for that party’s costs may be shared. The apportionment of liability for the claimant’s damages is relevant but is not necessarily the appropriate basis for apportioning those costs. The court should adopt an equitable allocation having regard to each party’s role in causing and conducting the unsuccessful claim.

The claimant was injured in a collision with a lorry being delivered to an event organised by Cambridge City Council and operated by a fairground contractor. The court had previously found the lorry driver and the Council negligent, apportioned liability for the claimant’s damages between them, and found the fairground contractor not negligent.

The contractor sought its costs on the standard basis until expiry of a Calderbank offer and on the indemnity basis thereafter. The Council and the driver disputed indemnity costs and differed over the proportion in which they should pay the contractor’s costs. The court also addressed the Council’s claim for repayment of an overpayment.

1. Overpayment. The Council had made an overpayment of interim payments and costs on account. The driver was ordered to pay the Council £37,550 within 21 days.
2. Basis of assessment. The contractor’s offer to withdraw the claims in return for bearing its own costs did not justify indemnity costs. The court exercised its discretion by considering the limited period for acceptance, the contractor’s failure to comply with a direction to provide reasons for not engaging in alternative dispute resolution, and, more importantly, the generally unsatisfactory nature of the contractor’s evidence. Its costs were therefore to be assessed on the standard basis.
3. Responsibility for payment. Both the driver and the Council had actively argued at trial that the contractor was liable. Both should therefore contribute to the contractor’s costs. The earlier apportionment of liability for the claimant’s damages was not determinative because the Council had initiated the contribution proceedings that brought the contractor into the litigation, and the principal dispute concerning the contractor’s liability had been between the Council and the contractor.
4. The Council’s settlement offer carried little weight. It was just below the percentage of liability ultimately attributed to it, but the court’s task was to allocate the contractor’s costs equitably rather than replicate the damages apportionment. The contractor’s costs were ordered to be paid 40% by the driver and 60% by the Council.