Behave or suffer the consequences

Blog for New Law Journal by David Cooper, council member of the Association of Costs Lawyers and a partner at Peterborough firm Taylor Rose TTKW Ltd

Bad behaviour is often the type of conduct that can give rise to severe penalties, but it can take many different forms. There has been a recent flurry of examples of conduct that have led to heavy financial consequences. The issue is being considered in areas of litigation which were previously regarded as safe areas, but not anymore.

Ensuring that in all respects cases are conducted appropriately applies not only during the course of the substantive proceedings but also in relation to issues as to costs and the detailed or summary assessment of those costs.

For example, the court has the power to strike out a case if it finds it to be an abuse of the court process or as a consequence of non-compliance with a rule, practice direction or court order (CPR 3.4). There may also be instances where it is established that there are no reasonable grounds for bringing or defending a claim, where proceedings are vexatious, if it is wasteful litigation or if a claim is entirely without merit. We also have the dishonest parties.

The strike-out of the case, or parts of it, can have consequences in relation to whether or not the claim, which may otherwise be valid, can proceed with the potential loss of damages that may be claimed and costs consequences.

Even if a case is not struck out and does proceed to settlement following a part 36 offer or a final hearing, issues of conduct can arise when the successful party seeks a more beneficial costs order (e.g. indemnity instead of standard basis) or the paying party wants to reduce the amount of costs it has to pay.

In London Borough of Lambeth v MCS and Lambeth CCG [2018] EWCOP20, a regrettable situation arose in relation to a Colombian woman who required a significant amount of care, was deprived of her liberty and had to seek the assistance from the Court of Protection following a delay of approximately four years in arranging for her to return to her home country.

Generally, as the jurisdiction of this court is inquisitorial rather than adversarial, orders for costs are not made as between parties. There are, however, those cases where it is necessary to reflect bad behaviour or conduct when considering consequential costs order.

Mr Justice Newton was appalled at the numerous incidents of what he regarded as bad conduct, not only during the conduct of the proceedings but also after judgment when the issue of the appropriate costs orders were being dealt with. He decided that it was appropriate to make an order for costs.

He said: “Without hesitation I conclude that the circumstances of this case are so poor and so extreme (both in relation to institution of proceedings and the subsequent conduct) that I should make an order that the costs of the proceeding should be borne by the applicant and second respondent.” The judgment in respect of the substantive case ([2018] EWCOP 14) makes interesting, if disturbing, reading.

Even in small claims cases there is provision for the court to make an order for costs (where usually no order for costs is made) if it finds that party has “behaved unreasonably” (CPR 27.14(2)(g)).

If the case settled after a part 36 offer, the conduct of the parties is a factor to be taken into account when considering whether it is unjust to make orders under CPR 36.14(2) and (3). Then there is the feared example of a wasted costs order against the legal representative under section 51(6) Senior Courts Act 1981 (see also CPR 46.8).

This is particularly important in view of section 67 of the Criminal Justice and Courts Act 2015, which requires the court to report the making of a wasted costs order to the lawyer’s regulator.

In personal injury cases, the one-way costs shifting provisions will also bring into play the issue of conduct if it is sought to apply the exemption under CPR 44.15.

With the increased awareness of the tools available to either enhance the prospects of success in the substantive case or in relation to costs, or to reduce exposure to damages or costs, it is essential that the practitioner has a very good grasp of the provisions on behaviour and conduct that exist and that the position is continually monitored during the progress of any case.

This article was first published in the September 2018 edition of the New Law Journal.

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19 Oct 2018

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