Tag: #indemnitybasiscosts

Actor ordered to pay Guardian News indemnity costs and a £3 million payment on account of costs

angelanakoLeave a comment

Mrs Justice Steyn in Clarke v Guardian News & Media Ltd [2025] EWHC 2575 (KB) examined the issue of costs following the dismissal of actor, Noel Clarke’s, defamation and data protection claims against the Defendant newspaper. To determine the appropriate costs, the judgment addressed the Claimant’s conduct, the costs approved in the costs budget and the various “costs reserved” orders made during the proceedings. Whether the Claimant should make a payment on account of the costs pending detailed assessment and the amount of the payment is also considered in detail.

Background

The Defendant in this case had succeeded on the defences to defamation and the issue of serious harm in respect of 8 articles published about the Claimant actor. The Court determined that the Defendant had been wholly successful and therefore entitled to an order that the Claimant pays costs subject to detailed assessment.

Indemnity Basis Costs

With regards to the basis of assessment, the Judge referred to the legal principles in relation to exercising the court’s discretion to award costs on the indemnity basis summarised within the White Book at 44.3.8 to 44.3.10. The Judge cited the importance of the Court having regard to all the circumstances of the case and the conduct of the Claimant being a key element of this.

The Judge found that the Claimant’s pleaded case and the evidence at trial contained many statements that the Judge found to be untrue and dishonest. Mrs Justice Steyn referred to Esure Services Limited v Quarcoo [2009] EWCA Civ 595, which concluded that if a court finds a claim to have been brought or maintained dishonestly then “it will be normal for a court to seek to mark its disapproval” by making an order for indemnity costs.

Further, the Judge made reference to the Claimant making “wholly unfounded allegations of dishonesty against three professional journalists” and aired those publicly.

It was also highlighted that an order for indemnity costs does not require the Defendant to show that the Claimant’s unreasonable conduct increased its costs. Consequently, the Judge ordered the Claimant to pay the Defendant’s costs of the claim to be subject to detailed assessment on the indemnity basis, if not agreed.

Payment on Account of Costs

When addressing the issue regarding a payment on account of costs, the Judge referred to CPR 44.2(8) which states: “Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs unless there is good reason not to do so.”

The Judge had regard for the way the claim had been pursued by the Claimant and the fact that costs would be assessed on an indemnity basis. The Judge also took into account the Defendant’s Precedent H of July 2024 where the total of the Defendant’s budgeted costs and incurred costs were £3,184,519.98, not including the estimated costs of disclosure, which were left to be agreed or subject to detailed assessment. This figure also did not include costs in respect of the Trial Preparation and Trial phases.

The Judge concluded that it was reasonable for a payment in the sum of £3 million to be sought by the Defendant.

Additional Costs Points

“Costs reserved” orders were made during the proceedings, regarding the Defendant’s application for an interim non-disclosure order and an Amendment and Joinder Application. The Judge concluded that the Defendant was entitled to these costs.

The Claimant asked the Judge to stay the costs order pending a potential application for permission to appeal. This was rejected as the Claimant already had more than the usual time to consider any grounds to seek leave to appeal and the Judge was not prepared to provide an extension of time to seek permission to appeal.

Conclusion

At paragraph 39 of the judgment, Mrs Justice Steyn articulates the reasoning behind her decision as she states: “Bearing in mind that the sum claimed by the Defendant on detailed assessment will be in excess of £6 million and having regard to the nature of the claim and the way in which it has been pursued by the Claimant and his lawyers; bearing in mind also the Defendant’s rates as they appear on the Precedent H forms and what appears, on the face of it at least, to be a reasonable use of more junior solicitors where appropriate; and also bearing in mind that I have ordered that costs will be assessed on an indemnity basis; it seems to me that the sum of £3 million sought by the Defendant is appropriate and no more than ought reasonably to be ordered in this case. It is a “reasonable sum” to require the Claimant to pay on account. It is substantially lower than the Defendant’s likely level of recovery on detailed assessment and so, in my judgment, it does allow for a suitably wide margin of error. Accordingly, I shall order the Claimant to make a payment on account in the sum of £3 million within 28 days.”

Angela Nako is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Part 36 offers, the basis of assessment, and knowing your expert

Joanne ChaseLeave a comment

It is well known within the costs profession that there is some tension in the provisions of CPR 36.17, which deals with the costs consequences following judgment.

When a Claimant beats their own Part 36 offer, CPR 36.17 (4) provides that the Claimant is entitled to: interest not exceeding 10% above base rate from the date of expiry of the offer on the whole or part of any sum of money awarded, their costs on the indemnity basis from the date of expiry of their offer, interest on those costs, again, at a rate not exceeding 10% above base rate, and a prescribed percentage uplift limited to a maximum of £75,000 (10% on awards less than £500,000, and for awards more than £500,000, 10% on the first £500,000 and 5% of any amount above that figure thereafter).

However, for the Defendant, the rules are not quite so generous. CPR 36.17 (3) provides that the Defendant is entitled to costs from the date on which the relevant period expired, and interest on those costs. There’s no mention of indemnity basis costs, and no mention of any enhanced interest.

The recent costs decision in the case The Governors and Company of the Bank of Ireland (1) and Bank of Ireland (UK) PLC (2) v Watts Group PLC [2017] looked at this point closely, with the Defendant trying to persuade the Hon. Mr Justice Coulson that they should be awarded their costs on the indemnity basis following expiry of their first Part 36 offer, which they beat at trial, and which expired on 23 October 2015 (the parties had previously agreed that the Defendant should recover interest at 2% above base rate for the relevant period).

The Defendant relied on three main arguments; that the claim was hopeless and should never have been brought, that the Defendant had beaten their own Part 36 offer, and that the Claimant’s expert was heavily criticised by the trial judge.

The Hon. Mr Justice Coulson considered the principles that he had set out in Elvanite Full Circle Limited v Amec Earth and Environmental (UK) Limited [2013] EWHC 1643 (TCC), and summarised that “indemnity costs are appropriate only where the conduct of a paying party is unreasonable “to a high degree”. ‘Unreasonable’ in this context does not mean merely wrong or misguided in hindsight”. He went on to say that “The pursuit of a weak claim will not usually, on its own, justify an order for indemnity costs, provided that the claim was at least arguable”

In this case, he did not regard the case as being hopeless from the start, and he stated that the claim was, at least in part, supported by expert evidence and detailed witness statements.

He recognised that if the Claimant had beaten their own Part 36 offer then, in accordance with CPR 36.17(4)(b), they would have automatically been entitled to indemnity basis costs, however, he stated that whilst the rules were misaligned and considered unjustified by some, it remained the law that the same rules did not apply to successful Defendants.

He did, however, allow costs on the indemnity basis in relation to one discrete aspect of the case – the expert’s conduct, and he relied on the decisions of Balmoral v Borealis [2006] and Williams v Jervis [2009] in doing so. He considered that the expert’s conduct should be reflected in the costs order, but he did not consider that an order for indemnity basis costs in their entirety was appropriate. He recognised that the expert’s inadequacies had already been a factor in the Claimant losing at trial, and therefore “to order indemnity costs as well would be penalising the Bank twice over for the conduct of their independent expert”. He ordered that costs of the Defendant expert should be assessed on the indemnity basis, as well as costs of and occasioned by the oral evidence given by the Claimant’s expert at trial.

The Claimant paid a heavy price for relying on an expert who had never given oral evidence at a trial. However, the conduct of the expert did not persuade the Court to allow indemnity basis costs throughout. Nor did the fact that the Defendant had beaten their own Part 36 offer. And whilst the Claimant bank accepted that they lost the litigation “badly”, they denied that the claim was unreasonably brought and they warned about the dangers of applying hindsight to such decisions.

It, therefore, seems that there is a high bar to clear in persuading the judge to award indemnity basis costs in a claim where the Defendant has successfully beaten their own Part 36 offer. Like in this case, a paying party would need to consider and rely upon the factors listed in CPR 44.2 (4), in order to formulate a case that would persuade a judge to make such an award in the circumstances.

If you have any questions or queries in relation this blog or legal costs in general please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 246 0622.