Cost penalties have been imposed on both parties to the litigation for not settling (Multiplex Constructions (UK) Limited v Cleveland Bridge UK Limited and another [2008] EWHC 2280 (TCC)). The judgment, given in the Wembley litigation, a dispute regarding a final account concerning the construction of the new stadium, sets out a guide, derived from recent authorities, as to how the courts should approach costs and applies the recent Court of Appeal decision in Carver v BAA PLC ([2008] EWCA Civ 412).

In Carver the claimant, who had rejected and beaten the defendant's Part 36 offer, but only by a small amount, was penalised in costs for not engaging in any meaningful settlement negotiations or putting forward a reasonable offer. The Court of Appeal held that following the 2007 amendments to Part 36 of the Civil Procedure Rules, the court may undertake a more wide-ranging review of all the facts and circumstances of the case when deciding whether a judgment is "more advantageous" than a rejected settlement offer or "worth the fight". This may include more subjective factors, including the emotional toll of the litigation.

The result of both these cases is that there are increased risks for parties who reject settlement offers. The judgment is all the more significant as the judge in the case was Jackson J, now Jackson LJ, who is charged with carrying out a fundamental review of costs in the coming year (see item 2 above). Click here for more details.