Scott Halborg & Anor v Albert Halborg & Ors

Indemnity costs may be ordered where a party’s conduct is wholly unreasonable and out of the norm, including an unreasonable failure to accept a sensible offer addressing modest issues. The court may evaluate the conduct of the litigation as a whole when determining costs of an appeal forming part of abusive and unmeritorious proceedings. It need not ring-fence the appeal from the wider litigation where doing so would be unjust. Respondents attending a permission hearing may recover costs where the court ordered or requested attendance, or where it is just in all the circumstances. Partial success may justify a percentage reduction, but the court may make no reduction where the appeal should never have proceeded to a substantive hearing.

The judgment concerned costs arising from appeals in two county court claims, following decisions of HHJ Bloom and HHJ Clarke in the County Court at Luton and Oxford. The appellants had pursued numerous grounds, but permission was granted on only six grounds, most concerning costs and case-management issues. One inspection issue succeeded against the barrister respondent; the appeals otherwise failed.

The respondents sought their appeal and permission-hearing costs on the indemnity basis. The central issues were the effect of admissible settlement offers, the relevance of the conduct and outcome of the underlying litigation, the costs of attendance at the permission hearing, and the appropriate reductions for the appellants’ limited success.

1. The appellants’ failure to accept the respondents’ offers, or even to engage substantively with them, was wholly unreasonable. Given the modest sums at stake and the court’s previous indication that the appeals should be compromised, that conduct cleared the high threshold for indemnity costs. The respondents were therefore entitled to indemnity costs from the date on which the offers should have been accepted.

2. The costs discretion required consideration of the wider conduct of the proceedings. The lawyer claim had already been struck out as disclosing no reasonable grounds and as an abuse of process. It was appropriate to take that judgment and order into account as relevant conduct under Civil Procedure Rules 1998, r 44.2(5). The appeal process was not immune from that overall evaluation. Ring-fencing the appeal costs would have been unjust where the appeal formed part of abusive and unmeritorious litigation.

3. The authority of Excelsior Commercial [2002] EWCA Civ 879 supported the description of conduct as out of the norm. The court also recognised that the discretion to award indemnity costs must ultimately be exercised to deal with the case justly.

4. Under Civil Procedure Rules 1998, r 52CPD B, para 8.1, the grounds for awarding a respondent costs of attending a permission hearing were disjunctive. An appeal concerning a civil restraint order was not outside the rule. Attendance was justified because it had been ordered and had materially assisted the efficient and manageable disposal of the applications.

5. The solicitor respondents’ costs were payable on the indemnity basis. The barrister respondents’ costs were reduced by 5 per cent to reflect limited unnecessary work and the one successful inspection ground. The trust respondents’ costs were standard until 5 July 2022 and indemnity thereafter, with a further 5 per cent reduction for costs relating to the civil restraint order permission issues. Interim payments on account were ordered.

• High Court (King’s Bench Division): Costs judgment following appeals from decisions of HHJ Bloom and HHJ Clarke in the County Court at Luton and Oxford. The appeals succeeded on one limited inspection issue and otherwise failed.