DSN v Blackpool Football Club Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Griffiths |
| Judgment Date | 20 March 2020 |
| Neutral Citation | [2020] EWHC 670 (QB) |
| Date | 20 March 2020 |
| Docket Number | Case No: QB-2018-005979 |
| Court | Queen's Bench Division |
[2020] EWHC 670 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Griffiths
Case No: QB-2018-005979
James Counsell QC (instructed by Bolt Burdon Kemp) for the Claimant
Michael Kent QC and Nicholas Fewtrell (instructed by Keoghs LLP) for the Defendant
Hearing date: 20 March 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Last week, I gave judgment for the Claimant in this case after a trial: DSN v Blackpool Football Club Ltd [2020] EWHC 595 (QB).
The parties have agreed an order, including damages of £19,746.37 inclusive of interest to the date of judgment on 13 March 2020, together with an additional amount of £1,974.64 pursuant to CPR 36.17(4)(d). Only three points have not been capable of agreement. These are:-
i) Whether costs should be on the standard or indemnity basis.
ii) The amount of an interim payment on account of costs.
iii) Whether there should be permission to appeal.
This is my decision on those three outstanding points. I have received helpful written submissions from Counsel on both sides.
(1) Whether costs should be on the standard or indemnity basis
It is agreed that costs should follow the event, so that the Claimant gets his costs of the action from the Defendant. However, the Claimant seeks, and the Defendant resists, an order for costs on the indemnity basis.
The argument falls into two parts.
Indemnity costs claimed under CPR 36.17(4)(b)
Indemnity costs are sought, first, as a result of a CPR Part 36 offer made by the Claimant to the Defendant on 2 December 2019 which is agreed to have been effective. The offer was that the Claimant would accept £10,000 “in settlement of his whole claim”. The Defendant did not accept the offer and I have awarded damages which exceed the amount of the Claimant's offer.
It is common ground that CPR 36.17(4) applies, so that, in these circumstances:-
“…the court must, unless it considers it unjust to do so, order that the claimant is entitled to—
(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;
(c) interest on those costs at a rate not exceeding 10% above base rate; and
(d) provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below…
(5) In considering whether it would be unjust to make the orders referred to in paragraphs (3) and (4), the court must take into account all the circumstances of the case including—
(a) the terms of any Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;
(c) the information available to the parties at the time when the Part 36 offer was made;
(d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; and
(e) whether the offer was a genuine attempt to settle the proceedings.”
The Defendant accepts that it is just for all the consequences specified to follow, except the award of indemnity costs. Therefore, the agreed order includes enhanced interest under CPR 36.17(4)(a) and (c) and an additional amount under CPR 36.17(4)(d).
The particular circumstances of the case to which I am directed by the non-exhaustive list in CPR 36.17(5) do not favour the Defendant in any respect, and the Defendant does not argue that they do.
The Defendant argues, however, the Claimant's costs budget was approved in March 2018 when the Claim Form said the total value of the claim would exceed £50,000 but would not exceed £100,000, and when the Claimant's schedule of loss included claims for past and future loss of earnings “TBA”; a heading which was dropped from the Claimant's revised schedule of loss dated 22 October 2019. The Defendant argues that an order for indemnity costs will preclude the costs judge from having regard to proportionality, and that it would be unjust to make such an order for that reason because the costs budget was based on an inflated valuation of the claim.
I am not persuaded by that argument. It is correct that an order for indemnity costs means that CPR44.3(2)(a) does not apply, with the result that the requirement when costs are assessed on the standard basis that costs should be “proportionate to the matters in issue” does not apply. But that does not make me think that it would be unjust to make the order for indemnity costs which I must otherwise make under CPR 36.17(4)(b). It is an inherent feature of indemnity costs that proportionality is not a factor on assessment, and indemnity costs are the usual order for costs when a Defendant fails to beat a Claimant's Part 36 offer. On no view will the Claimant recover, even on an indemnity basis, more than the costs he has actually incurred, and, as the Court of Appeal said in McPhilemy v The Times Newspapers Ltd (No.2) [2001] EWCA Civ 933; [2002] 1 WLR 934; per Chadwick LJ at para 22
“The purpose for which the power to order the payment of costs on an indemnity basis is conferred, as it seems to me, is to enable the court, in a case to which CPR 36.21 applies, to address the element of perceived unfairness which arises from the fact that an award of costs on the standard basis will, almost invariably, lead to the successful claimant recovering less than the costs which he has to pay to his solicitor.”
See also East West Corporation v DKBS 1912 and AKTS Svenborg [2002] EWHC 253 (Comm) per Thomas J at para 14:-
“The purpose of the award of an enhanced rate of interest or indemnity costs is to encourage parties to make offers of settlement in the ordinary sense of that word. It is to compensate the claimant who has made an offer that should have been accepted for the risk of continuing with the action and to bring home to the defendant the risks being run by not accepting it.”
The removal of proportionality as a consideration is part of the incentive given for the Part 36 offer to be made and accepted, and I see no injustice in the Defendant in this case paying indemnity costs, having failed to beat the Part 36 offer.
It follows that the Defendant must pay the Claimant's costs on the indemnity basis from 24 December 2019 pursuant to CPR 36.17(4)(b).
It is not at all clear to me, in any event, that the costs budget was based on an inflated valuation of the claim, or that the costs budget was materially affected by the loss of earnings element of the claim.
Indemnity costs claimed as a result of failure to engage in Alternative Dispute Resolution
The Claimant also claims indemnity costs on a broader basis and for a longer period. He argues that an indemnity costs order should be made in respect of all his costs because of the Defendant's conduct and, in particular, its failure to engage in settlement discussions.
The relevant chronology is as follows.
The Claim Form was issued on 19 January 2018.
On 16 March 2018, the Claimant's solicitors made a Part 36 offer to settle the claim for £50,000. The Defendant did not respond to this offer at all.
After hearing from the Claimant's solicitor and Counsel for the Defendant on 30 October 2018, Master McCloud gave directions in the case. These included the following direction in paragraph 4:
“ ALTERNATIVE DISPUTE RESOLUTION
At all stages the parties must consider settling this litigation by any...
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