Thursday, 5 March 2020

Lejonvarn v Burgess and Another

[2020] EWCA Civ 114

We have previously discussed this case in Issues 188, 203 and 223. As a final act, the CA considered whether or not the successful defendant was entitled to her costs on an indemnity basis. The claim had failed in its entirety, but at first instance the TCC held that the defendant was entitled to have her costs, in the region of £725k, assessed on the standard basis. 

LJ Coulson noted that the position of a defendant who beats their own Part 36 offer, is that they are not automatically entitled to indemnity costs. But they can seek an order for indemnity costs if they can show that, in all the circumstances of the case, the claimant’s refusal to accept that offer was unreasonable such as to be “out of the norm”. Further, if the claimant’s refusal to accept the offer “comes against the background of a speculative, weak, opportunistic or thin claim, then an order for indemnity costs may very well be made”.

In the case here, the CA gave judgment in April 2017 limiting the duty of care owed by the defendant for the free advice given. LJ Coulson said that the claimant, having had time to consider the implications of that CA judgment, should have realised that the remaining claims were so speculative/weak that they were very likely to fail and should not be pursued any further. The CA’s judgment emphasised that the duty owed to the claimant related only to the things that the appellant had actually done, not the things which it was suggested she should have done but omitted to do. 

Significantly, the critical impact of this change should have been only too obvious to the claimants, because they will have known how little work the respondent had done. The claimants should have called a halt, because their underlying claims were speculative/weak, but they failed to do so. Why was this? LJ Coulson noted that the decision to continue seemed to have been borne out of a desire “to punish the appellant for her alleged negligent mistakes rather than seek fair and reasonable compensation for her alleged mistakes”. This was precisely the sort of conduct which the court is likely to conclude is out of the norm and so lead to an indemnity costs order.  

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