Charles Bellhouse & Anor v Zurich Insurance Plc

Where a party avoids strike-out or summary judgment only because the court gives it a final opportunity to cure serious pleading defects, that party may properly be treated as unsuccessful for costs purposes. The court may determine costs before the further particulars are filed.

An indemnity costs order is justified where conduct is unreasonable and takes the case outside the norm. Persistent refusal to plead essential elements, despite proper requests, causing substantial delay and unnecessary expenditure, may satisfy that test. A fraud allegation does not by itself justify indemnity costs where the same pleading deficiencies would affect a non-fraudulent claim.

The judgment concerned consequential matters arising from the claimants’ application to strike out, and for summary judgment on, substantial parts of Zurich’s defence and counterclaim under a household insurance policy.

In the substantive judgment, [2025] EWHC 1416 (Comm), the court struck out one limb of the contract works exclusion defence. It otherwise gave Zurich an opportunity to provide further particulars addressing serious deficiencies in its misrepresentation and contract works pleadings. The present judgment determined who had succeeded, whether costs should be assessed on the indemnity basis, and the amount of costs payable.

1. The claimants were the successful parties. Zurich had avoided immediate strike-out and summary judgment only because it was required to remedy clear deficiencies in its pleaded case. That conditional indulgence did not amount to success. The court rejected the comparison with Burnden Holdings (UK) Ltd v Fielding.

2. The court applied the principles identified in Three Rivers DC v Bank of England: the discretion to award indemnity costs is wide; there must be conduct or circumstances taking the case outside the norm; and unreasonable conduct is sufficient, without moral condemnation being required.

3. Zurich’s persistent refusal to provide essential particulars, despite a proper request for further information, had stalled the litigation for almost a year, diverted attention from the real issues, and caused substantial and unnecessary expenditure. The conduct was outside the norm for a consumer insurance dispute and justified indemnity costs. The allegation of fraudulent misrepresentation was not independently sufficient.

4. The claimants’ costs were summarily assessed on the indemnity basis at £87,290.40 including VAT. The court allowed the revised costs schedule, but disallowed £935 plus VAT for counsel’s involvement in an extension-of-time consent order and £2,100 for unnecessary attendance by an additional fee-earner. The costs of the evidence-extension application were assessed at £966 including VAT.

5. Zurich was ordered to pay the claimants’ costs of and occasioned by the further particulars. The order struck out the words “contract works and/or” from paragraph 94 of the defence and required Zurich, if it wished to maintain the remaining defences, to serve short further particulars by 9 July 2025. Subject to compliance, the application would be dismissed.

The judgment was a consequential judgment following the substantive decision on the claimants’ application, handed down on 18 June 2025 under [2025] EWHC 1416 (Comm).