The High Court has recently set out some basic costs principles in the context of the long running Wembley Stadium dispute2. Multiplex was the main contractor on the Wembley project and brought a claim against its subcontractor Cleveland Bridge UK Ltd (CBL). Judgment had been given on the preliminary issues, but arguments continued regarding quantum and costs.  

A number of offers to settle had been made by both parties, but there were no global offers made by either party, nor did CBL make any Part 36 offer. The Court awarded Multiplex, the overall “winner” in the dispute, 10% of its costs, which the Court doubled to take account of CBL’s behaviour. The Court was particularly influenced by CBL’s failure to make a global offer.  

A number of pointers on costs can be drawn from the broad principles laid down by Jackson J:  

  • As a general rule, the successful party should recover its costs in full, although this is only a starting point.
  • In many cases, the court can and should reflect the relative success of the parties on difficult issues by making a proportionate costs order.
  • The court will have regard not only to any Part 36 offers made, but also to a party's approach to settlement and general conduct in the litigation.
  • A heavier onus rests on the defendant to make an offer.  

The court confirmed that the ruling in Lisa Carver v BAA plc3 (see our May 2008 Update) on the application of the new Part 36 rules can be applied to settlement offers in general. In Carver the claimant beat the defendant’s Part 36 settlement offer by a minimal amount. The court ruled that although the claimant had beaten the offer numerically, she had not succeeded in obtaining a "more advantageous" judgment as required under the new Part 36 rules. In Multiplex, the court confirmed that if a party makes an offer under Part 36 or a settlement offer in relation to which the court has a discretion as to costs, and that offer is nearly but not quite sufficient, and the other party rejects that offer without any attempt to negotiate, it may be appropriate to penalise the second party in costs.  

Above all the decision illustrates that costs orders can be unpredictable and parties need actively seek to settle proceedings at a realistic level to maximise costs protection.