In Business Environment Bow Lane Ltd v Deanwater Estates Ltd – Lawtel 9.10.08 the Claimant’s claim was initially made in the sum of £557 483.97 but reduced to £423 734.89 and the Claimant ultimately accepted £1 073.50 in settlement.

In this instant case, the effect of such exaggeration was that the Defendant was the clear winner in the action. The TCC, in deciding whether to award costs to the Defendant, as the party which had ostensibly succeeded in the claim, held that the effect of exaggerating a claim might be to prevent parties having realistic discussions at an early stage to resolve a dispute or prevent a successful mediation. Before an order for indemnity costs could be made, there should normally be a significant level of unreasonableness or otherwise inappropriate conduct in that a party's pre-litigation dealings with the successful party at the pre-litigation stage or in relation to the institution and conduct of the litigation.

In this case, the Claimant, both before and after the institution of proceedings, had acted in a way which had taken the case out of the norm. The Claimant had represented to the Defendant, both before and after the start of the litigation, that it had a very substantial claim. It followed that the appropriate order was that the Claimant pay the Defendant's costs, other than those subject of the order of the Court of Appeal, on an indemnity basis.