By Carla Jones

Solicitor Director

 

A recent Court of Appeal case has highlighted how unreasonable behaviour can land a party to Litigation in very hot water when it comes to the question of costs.

In the case of Lejonvarn v Burgess and Anor, Lord Justice Coulson said the Claimant couple (the Burgesses) had pursued their neighbour weak and speculative claims, and that they had unreasonably refused to accept an offer made within weeks of Court proceedings starting.

The general rule in litigation is that the “loser” pays the “winner’s” costs and costs can be awarded in one of two ways; standard costs or indemnity costs.

If you are awarded standard costs you can expect to be awarded somewhere in the region of 60 -70% of the total costs you’ve had to pay, whereas an indemnity costs award will result in a much higher percentage being awarded.

In the Lejonvarn case, the Burgesses had sued Lejonvarn who worked an architect, after she provided free help to them on major landscaping work in their garden.

The Burgesses’ claim failed after the court found that Lejonvarn had in fact provided very little in the way of services to the Burgesses and had not, in any event been negligent.

Despite losing the initial case in the Court of Appeal, the Burgesses then brought a new case which they tried to claim was not the same as the first one. The Burgesses failed again when the new case went to trial.

Lord Justice Coulson, who dealt with the Appeal, acknowledged that Lejonvarn’s final costs bill, which stood at a massive £724,265 was ‘eye-watering’.

The High Court had decided that costs should be assessed on the standard basis, so on the face of it Lejonvarn could have been expecting to receive only £435,000 of that £724,265 back. However, Lejonvarn made an appeal to have costs assessed on an indemnity basis.

In deciding the matter Lord Justice Coulson  said of the High Court Judge; ‘The judge appeared to consider that an order for indemnity costs was only appropriate where it could be shown with hindsight that costs had been unnecessarily incurred… I do not accept that this was the right approach as a matter of principle.’

Lord Justice Coulson said that the Burgesses should have realised the remaining claims were so weak that they were doomed to fail. He also commented that the Burgesses’ actions seemed to be about punishing Lejonvarn for alleged mistakes and called it ‘An irrational desire for punishment unlinked to the merits of the claims’.

In deciding on what basis costs should be paid, Coulson said the court should always consider whether the claimant’s conduct was such that a defendant should be eligible for indemnity costs.

Lord Justice Coulson went on to award Indemnity costs from a month after the first Court of Appeal judgment was made, which he said should have seen an end to proceedings. The Burgesses’ decision to continue to fight after that point, even though their case was extremely weak was unreasonable and the costs award needed to reflect that position.