Haynes v Dept for Business Innovation and Skills (2014)

This High Court decision offers valuable guidance as to how to allocate costs between multiple defendants. It highlights two key categories of common costs: non- specific costs and specific costs. The former category  is costs which would have been incurred in any event irrespective of the number of defendants. Hence, 100% of these costs are (in principle) payable by each and every defendant. In contrast, with respect to “specific costs” each defendant is only responsible for the particular share of those costs attributable to it.

The claimant widow of an employee allegedly exposed to asbestos by ten different employers issued proceedings against all ten employers. During those proceedings she made separate Part 36 offers to each defendant to settle  her claim against that particular defendant. Only one (the Department for Business Innovation and Skills (“DBIS”)) accepted her Part 36 offer. She then abandoned her claims against the other nine defendants. Master Simons held that DBIS was only liable for the costs directly attributable to the action against it (specific costs) as well as one-tenth of the common costs.

When a Part 36 offer is accepted within the requisite period, under 36.10(1) the claimant is entitled to claim “the costs of the proceedings” up to the date of acceptance of its offer.

The High Court found that the “costs of the proceedings” means the costs of the proceedings against the particular defendant who accepted the offer. In a multi-party case, the defendant who accepts an offer should not have to pay all the costs, some of which might not have been caused  by him. There were two types of common costs in issue in this case: (a) non-specific costs and (b) specific costs. Non-specific costs included court fees, medical reports  and travel expenses which would have had to have been incurred in any event, regardless of the total number of defendants. The High Court concluded that the claimant was entitled to 100% of these non-specific costs from DBIS.

Specific costs, on the other hand, are common costs which are in principle, capable of identification and division, such as a conference with counsel concerning the liability of all ten defendants. The High Court explained that with respect to these costs “evidence-based decisions are required, rather than an approach which simply identifies the number of defendants”. In other words, the courts should not adopt a rough and ready approach by simply dividing these costs by the number of defendants. However, the difficulty with this case was that there was a lack of evidence to determine what portion of the specific costs was attributable to DBIS. In light of this, the High Court was obliged to order that DBIS simply pay a one tenth share of these “specific” costs.

http://www.bailii.org/ew/cases/EWHC/QB/2014/643.html