CH-2025-BRS-000001 - [2025] EWHC 2530 (Ch)

Next, I deal with the basis of the assessment of costs. As I pointed out in my earlier judgment, the indemnity basis of costs assessment was discussed by Hildyard J in Hosking v Apax Partners Ltd [2019] 1 WLR 3347, [42], [43]. There, the judge said:

But, of course, these are not the only things. In seeking indemnity costs, the respondents rely on what they call (i) Julian’s unreasonable refusal to mediate; (i) Julian’s pressing for an unwarranted factual enquiry in pursuit of an unjustified case; (iii) Julian’s making and failing to withdraw improper allegations; (iv) Julian’s pursuit of resolution of what he called the “central issues”; (v) Julian’s misdescription of the ratio of authorities cited to the court by him; (vi) the elaborate and repetitive nature of Julian’s grounds and skeleton arguments; (vii) other actions by Julian.

Julian submits that his conduct of the appeal cannot have been out of the norm, because Michael Green J gave permission to appeal. He says that it “is a strong indication that the appeal was not speculative, abusive or otherwise ‘out of the norm’,” otherwise “permission to appeal would not have been granted.” I do not accept this submission. The test for giving permission to appeal is not whether the appellant’s conduct has or has not been out of the norm, but instead whether the appeal has a real prospect of success, or there is some other compelling reason. I turn therefore to the various points relied on by the respondents.

Point (i): On 14 April 2025, the respondents put forward 26 dates for mediation (5 dates in May, and 21 in June). They chased for a response on 9 May 2025, and again on 8 June 2025. A holding response was sent on 13 June, but a substantive response from Julian was received only on 23 June 2025, some ten weeks after 14 April. This reply said that none of the 26 proposed dates was possible, and also that on 10 June notice of the appeal hearing on 8 July 2025 had been received, so that it was unlikely that mediation could take place before the hearing.

In my judgment, it is unacceptable to take so long to respond to the mediation offer and suggested dates, especially when the answer was No. There was no explanation as to why this could not have been said on 13 June, let alone much earlier. It is equally unacceptable not to be able to make some re-arrangement which would enable the parties to mediate on at least one of those 26 dates. Not everyone on the team is needed. Even if it were acceptable so to behave, it is unacceptable not at least to try to find further dates, even close to the appeal hearing. It is patently obvious that Julian just did not wish to mediate.

Of course, there are cases where it is reasonable not to mediate. But, in my judgment, this was not one of them. And, even where it is unreasonable not to do so, that failure is simply a factor to take into account: Gore v Naheed [2017] 3 Costs LR 509, [49]. However, in the present case, in my judgment, Julian’s behaviour in frustrating the mediation purpose justifies a costs sanction. As Jackson LJ said in Thakkar v Patel [2017] 2 Costs LR 233, [31],

“ … The message which the court sends out in this case is that in a case where bilateral negotiations fail but mediation is obviously appropriate, it behoves both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction … ”

In a case where the successful party unreasonably fails to mediate, that sanction can involve a reduction in costs receivable. Here it is the unsuccessful party that should be sanctioned, so the court cannot reduce the costs receivable. Instead, the appropriate sanction may be to award indemnity costs. In my judgment, it is appropriate to do so on the facts of this case.

Points (ii) and (iv): I can deal with these points together. Julian insisted on pursuing matters other than whether or not he should be replaced, although the replacement issue was the point of the counterclaim which was still to be tried. What he called the “central issues” were not even pleaded. This is indeed conduct out of the norm.

Point (iii): Julian’s counsel submitted in writing on the appeal that the respondents’ counsel had wrongly submitted that (a) DJ Watson had not had his attention drawn to the decision of Chief Master Marsh in Schumacher v Clarke [2019] EWHC 1031 (Ch), and that (b) DJ Watson had not considered that authority, and that both assertions were false. However, it is clear from the transcript of the hearing before DJ Watson that Schumacher v Clarke was not referred to, and, indeed, Julian’s counsel accepted that it was so during the hearing before me. Yet Julian’s counsel did not seek to withdraw his submission. I consider that a lack of courtesy from one member of the Bar to another is highly regrettable, and in my experience it is abnormal, but I am not prepared to visit it upon Julian’s head.

Point (v): My view of the treatment by Julian’s counsel of the authorities can be seen in my judgment. On the material before me, I am not prepared to reach the conclusion that counsel deliberately chose to cite authorities for propositions for which he thought they did not stand, and I proceed instead on the basis that he mistakenly thought that they did. And, these days at least, I do not think that misunderstanding authorities is conduct out of the norm justifying indemnity costs.

Point (vi): The grounds of appeal and skeleton arguments were over-elaborate, repetitive, and difficult to follow. But, although this is regrettable, because it makes the judge’s task more difficult, in my judgment this is not of itself conduct out of the norm justifying indemnity costs.

Point (vii): In light of what I have said in the preceding paragraphs, it is not necessary for me to reach a conclusion on these lesser points.

In my judgment, my conclusions on points (i), (ii) and (iv) amply justify an award of costs on the indemnity basis.