22 June 2016Print This Post

Court penalises party that failed to entertain settlement attempts

High Court: percentage costs order was best approach

High Court: percentage costs order was best approach

A defendant that “resisted all early attempts at discussion or negotiation” has become the latest to have its conduct penalised in costs.

Mrs Justice Whipple said it was a case “crying out for some sensible attempt at negotiation before costs racked up and the parties’ attitudes hardened”.

She was ruling in Kupeli & Ors v Sirketi (t/a Cyprus Turkish Airlines) & Anor [2016] EWHC 1478 (QB), the costs judgment that followed her main judgment over losses suffered by passengers who failed to get on a replacement flight with the second defendant, Atlasjet, which had agreed to step in after the first defendant lost its air operator’s certificate.

She decided that the claimants had won, even though only a minority of claims and arguments had been successful, because ultimately the claimants were to receive a cheque from Atlasjet. “I conclude that the claimants’ success is not so modest that it can or should be treated as immaterial,” she added.

The judge said there should be a percentage costs order, rather than an issues-based one. She said: “That avoids the difficulty of identifying the issues to which the particular costs attach, which might be a very difficult exercise to perform in retrospect (for the parties and any costs judge in due course).

“That also avoids the prospect of continuing disputes over costs which might go on for months or years, noting that this is a case which has already been ongoing for a long time, appears to have generated a fair amount of ill feeling between the parties, and which quite clearly needs to be brought to an end.

“Finally, that avoids the spectre of what I would consider to be an undesirable and unfair outcome, namely of the claimants’ overall win (as I have found it to be) being eradicated (in effect) by the defendant’s costs attributable to particular issues. It is much better to determine the end position on costs now.”

In coming to a figure, Whipple J said that the defendant’s success at trial on every matter on the ‘list of issues’ before the court and in relation to the majority of contractual claims, had to be balanced against Atlasjet’s failure to make full disclosure and refusal to consider early settlement.

She said: “Atlasjet did not answer the claimants’ pre-action protocol letter (in fact Atlasjet was not served with proceedings until August 2012, over two months after that letter was sent, showing that the claimants were open to an informal response; the claimants are justified in saying that they had no option but to serve proceedings, given Atlasjet’s silence).

“The claimants’ Calderbank letter dated 24 April 2015 was, as things turned out, pitched too high; but it was at least some attempt at settlement. Atlasjet refused the offer and made no counter offer. The Calderbank offer was undoubtedly an admissible offer to settle to which I must have regard under CPR 44.2 (4)(c).

“Mr Adkin [for Atlasjet] is right to say that we will never know if this case could have been settled, but there are two further points to be made. The first is that even if the case could not be settled, an early meeting would surely have focused the minds of those involved, and is likely to have led at least to some narrowing of issues, which would in the end have saved costs.

“The second point is that there is a world of difference between a case which comes to trial after reasonable efforts at settlement have been made but settlement has proved impossible, and a case where one party has simply refused to engage, preferring to take the view that it will see its opponents in court. This is the latter type of case. That attitude inevitably gets weighed in the balance when it comes to costs, if that party fails.”

Whipple J ended up ordering that Atlasjet pay 33% of the claimant’s reasonable costs. “This percentage reflects the overall outcome of the case, the outcome on particular issues in the case, and the conduct of the parties in relation to the case.”

By Neil Rose


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