Steven Ellis & Ors v John Benson Limited

Indemnity costs require conduct which takes the case outside ordinary and reasonable litigation conduct. A party’s refusal of settlement offers, failure to admit contractual conclusions, unsuccessful allegations, imprecise evidence, or overbearing evidence will not necessarily meet that threshold.

Costs ordinarily follow overall success. A party’s failure on individual allegations or arguments does not justify a reduction where it remains the overall successful party and the issues are closely connected. Where costs are subject to detailed assessment and costs have been budgeted, a substantial payment on account may be ordered, subject to appropriate deductions.

Permission to appeal should be refused where the proposed grounds merely reargue fact-specific findings or fail to identify a realistic point of law.

The court had previously decided three preliminary issues in favour of the represented claimants. The consequential judgment addressed the dismissal of the defendant’s counterclaim, costs, a payment on account of costs, and the defendant’s application for permission to appeal.

The claimants sought indemnity costs and opposed a proposed 20% reduction. The defendant relied on the claimants’ partial lack of success, alleged deficiencies in evidence and disclosure, settlement offers, and matters arising during trial. The defendant also challenged the earlier findings that terms were implied in fact, that the defendant’s conduct breached those terms, and that the breaches were repudiatory.

1. Costs. The refusal of the settlement offers did not amount to unreasonable conduct of a high degree. The offers were made at different procedural stages, some before service of the claim and on a different pleaded case, and the final offer was made when the precise costs position was unknown. The unsuccessful allegations, failure to accept the notice to admit, overbearing evidence, and breach of the judgment embargo likewise did not take the case outside the norm. Indemnity costs were therefore refused.
2. Overall success. The represented claimants were the overall successful party. Their failure on particular arguments, including tax allegations and implied terms in law, did not justify a reduction. The successful and unsuccessful analyses were closely connected, and the criticisms concerning disclosure had no appreciable effect on the litigation. No 20% reduction was made.
3. Payment on account. Under Civil Procedure Rules 1998 r 44.28, a reasonable payment on account was appropriate. The parties accepted an order calculated by reference to 85% of the budgeted costs, excluding costs attributable to the unrepresented claimants, subject to any unresolved stay issues.
4. Permission to appeal. The earlier decision was fact-specific and concerned agreements having a relationship closer to employment than to an ordinary commercial agreement. The implied terms were terms implied in fact, arising from the particular agreements and the close relationship of cooperation. The proposed grounds concerning implication, breach, and repudiatory breach did not identify points of law with a real prospect of success and principally sought to reargue the evidence and factual findings. Permission to appeal was dismissed.

The judgment records that the court had previously determined three preliminary issues in favour of the represented claimants. No citation for that earlier judgment is stated in the judgment.