The defendant costs specialists

Posts made in February, 2007

Reducing costs on the grounds of conduct

By on Feb 16, 2007 | 0 comments

Three recent Court of Appeal decisions have done much to clarify the powers of a costs judge, during detailed assessment, in relation to disallowing costs on the grounds of the conduct of the receiving party. The difficulties in this area were largely caused by a High Court decision, Aaron v Shelton [2004] EWHC 1162. That authority seemed to indicate that if a paying party were going to rely on the conduct or misconduct of the non-paying party in order to seek a reduction in the costs to be paid, the time to raise that factor was at the end of the trial, or at the time of the making of the consent order, and not before the costs judge at the time of assessment. This decision has caused particular difficulty for defendants. Often, little or no consideration is given to the conduct of the other party, or the extent to which they have abandoned heads of claim, when the final order is made. This is not entirely surprising in the eagerness to settle the substantive claim. The application of Aaron, which was largely followed by the judiciary, and leapt on by claimants, precluded defendants from raising conduct issues at detailed assessment even where the conduct of the claimant cried out for some reduction of costs. The judgment in Ultraframe (UK) Ltd v Fielding [2006] EWCA Civ 1660 has now overturned the principle formulated in Aaron on the basis that it was too broadly stated. The correct approach was held to be, as per Waller LJ: “34. It seems to me that consideration of a party’s conduct should normally take place both at the stage when the judge is considering what order for costs he should make, and then during assessment. But the court will want to ensure that dishonesty is penalised but that the party is not placed in double jeopardy. Ultimately, the question is one of the proper construction of the order made by the judge. Thus it will be important for the judge, who is asked to take dishonesty into account at the end of a trial when considering the order as to costs, to consider what is likely to occur on assessment. Where dishonest conduct is...

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