10 August 2017Print This Post

F1 personality ordered to pay part 36 indemnity costs over failure to engage in settlement

Jordan: culpable failure

The High Court has ordered well-known Formula 1 personality Eddie Jordan to pay indemnity costs after he accepted a “very historic” £15,000 part 36 offer that was still open on the eve of trial – and which was £85,000 less than he had been offered a year earlier.

Mr Justice Mann said he was penalising Mr Jordan’s dilatory conduct of his claim – which related to phone hacking – and “the culpable failure to engage in negotiations which would, if conducted more properly, have been likely to have led to a settlement”.

In Jordan v MGN Ltd [2017] EWHC 1937 (Ch), the judge said: “The bottom line is that Mr Jordan did not advance any explanation, let alone a good one, why, having run his case for 2½ years, having failed to respond properly to a number of offers, one of which was close to his own proposed financial settlement, having caused himself and the other side to run up significant amounts of costs, and having exposed the defendant to the prospect of having to pay the CFA uplift and ATE premiums (which I am satisfied is a powerful threat to a defendant), should at the last minute do the equivalent of walking away from the action.

“I consider that all those factors, and the other matters referred to in this section, are good reasons for ruling that the costs be paid on the indemnity basis, and I so order.”

The action began in August 2014. During the course of its progress to trial, there were a number of both part 36 offers and ‘without prejudice save as to costs’ (WPSAC) offers, which were largely ignored.

The first was a part 36 offer in September 2014 that included an offer of £15,000 in damages. The figure kept going up and by June 2016, the defendant was offering £100,000. However, on the eve of the trial last month, Mr Jordan accepted the September 2014 offer.

Under part 36, this meant that Mr Jordan would have his costs until the expiry of the offer in October 2014 (although here an undertaking from the defendant meant the costs started from September 2016), and he would then have to pay MGN’s unless it was unjust to do so.

Mr Jordan sought to argue that it was unjust, but Mann J said his counsel “has not even begun to make a case for departing from the usual order…

“The claimant has been responsible for prolonging litigation for a considerable period and then (basically) caving in. The just result is that the normal consequences of the late acceptance of a part 36 offer should follow.”

MGN went on to seek indemnity costs, with Mann J finding it justified on Mr Jordon’s failure to engage properly in settlement negotiations.

He cited a previous, unreported, ruling he gave in the phone hacking litigation in March 2017, where he said: “It may be that inviting one’s opponent to make a series of offers without ever making on oneself after an initial stab… is a clever tactical manoeuvre to extract ever higher offers, but there comes a point at which it does not facilitate settlement.”

He also quoted the comments of the Chancellor of the High Court, Sir Geoffrey Vos, earlier this year in OMV, in which he warned that parties were obliged to make reasonable efforts to settle, and to respond properly to part 36 offers made by the other side, or face penalties.

Mann J said: “In my view the claimant has fallen short in that process. I leave out of account the early part 36 offers. Not to respond to those at an early stage of the litigation is not so culpable.

“But the failure to start to engage when the 2016 offers started coming in and increasing is culpable. One would have thought that a client who was willing to consider settlement would have started to engage more at that point.

“I find it hard to believe that a normal paying client, who was not litigating under a CFA and with the protection of ATE insurance, would have adopted the tactic of not responding and not engaging further.”

Nonetheless, the lack of engagement would probably not, of itself, have justified indemnity costs, the judge continued. “It is the addition of what happened towards the end of the process which does.”

In April 2017 the claimant made a £90,000 offer, to which the defendant responded that if that had been offered back in July 2009, the proceedings could have been brought to an end.

“On the evidence I have seen I think that that is likely… There was therefore, in my view, a culpable failure to engage in negotiations which would, if conducted more properly, have been likely to have led to a settlement. That is very significant matter.”

Also of significance was Mr Jordan’s late decision not to go to trial, having given every indication that he was ready for it.

By Neil Rose

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