9 August 2013Print This Post

High Court rejects off-set plea by party which agreed to one-way costs shifting

High Court: Jackson provided description, not definition

The High Court has refused to make a costs order in favour of a defendant which had agreed to one-way costs shifting but then wanted to set off the costs it had been ordered to pay earlier in the case.

Vava v Anglo American South Africa Ltd [2013] EWHC 2326 (QB) – a claim brought by South African miners over lung disease – saw the defendant agree to one-way costs shifting so that the claimants did not need to take out after-the-event insurance.

In an application for disclosure and information, Mr Justice Silber had awarded the claimants 60% of their costs – but they had not been assessed and nothing paid on account – before ultimately at trial Mr Justice Andrew Smith granted the defendant’s application challenging the court’s jurisdiction to bring the case in England.

He rejected the argument that the Jackson report’s description of one-way costs shifting – “a regime under which the defendant pays the claimant’s costs if its claim is successful, but the claimant does not pay the defendant’s costs if the claim is unsuccessful” – was the definition he should adopt (the report said this was the “meaning or description”).

The correspondence indicated that the intention was that the defendant would not seek to enforce costs orders against the claimants. However, it then did seek an order that would effectively neutralise the earlier costs award.

Smith J said he found it difficult to decide whether this would count as enforcement but ultimately decided it would be unfair to make such an order.

“I conclude that it would be unfair for two reasons, either of which is, to my mind, sufficient to decide this question in the claimants’ favour,” he said.

“First, it does not seem to me fair that AASA should set off liability under an order that it agreed should not be enforced against an enforceable order.

“Secondly, had the claimants proceeded to an immediate assessment of their costs, AASA's liability would probably have accrued and been paid before my decision about jurisdiction. As I have said, in those circumstances AASA could not properly have sought a costs order.

“It does not seem fair that the claimants should be worse off because they sensibly did not rush to have their costs assessed with the risk of a series of separate costs assessments between the parties.

“I appreciate that they could have gone some way to protect themselves by seeking from Silber J an order for a payment on account, but this does not alter my view of the fairness of the matter.”

By Neil Rose