The case of Richmond Pharmacology Ltd v Chester Overseas Ltd & Ors  EWHC 2692 (Ch) (01 August 2014) further demonstrates the need to continually assess the strengths of a case at all stages of the Court process.
In this particular case, the High Court decided that a Claimant, who had been ordered to bear the costs of proceedings for damages for loss allegedly suffered as a result of disclosure of confidential information, should pay those costs on an indemnity basis. This means that the Court will give the benefit of any doubt as to whether the costs were reasonably incurred or whether the costs were reasonable in amount in favour of the responding party. The more common costs assessment is on a standard basis, where the Court will give the benefit of any doubt as to whether the costs were reasonably incurred or were reasonable in amount in favour of the paying party.
The Deputy Judge focused on the fact that the Defendants’ contentions had been unsustainable even on the Claimant’s own evidence and had been pursued “irrespective of the facts.” He was not satisfied that at the commencement of the Claim, and the manner in which it was pursued were “sufficiently unreasonable“ to justify an award of indemnity costs. The estimate of loss substantially exceeded what a reasonable person would have considered realistic, but it was unreasonable “to a high degree” to have made such an estimate at that stage.
Once, however, disclosure and inspection had taken place as part of the usual course of proceedings the position was different. A reasonable person would then have realised it was unlikely that disclosure of the confidential information would have caused any loss, and that the claim had been “grossly exaggerated.”
The fact that the Claimant presented “very widely pleaded allegations” of breaches of duty and served an expert report alleging loss of more than £4 million (far in excess of any reasonable estimate), after it had had a reasonable time to review the disclosure documents the claim was deemed highly disproportionate and unreasonable. It was sufficiently outside the norm to justify an award of indemnity costs not least because the Claimant could have accepted a Part 36 offer made by the Defendant that remained open to acceptance until two months after disclosure.
The decision of the Court highlights the need for claimants to continually review the merits of their claims and each stage of the proceedings and, particularly, following the disclosure exercise. Likewise for defendants, well placed offers of settlement based upon disclosure demonstrating a significantly reduced position will place the defendant in a position of strength.
If you would like some guidance on how reasonable your claim is, before going to court, then please feel free to get in contact with me to arrange a time to have a confidential discussion. You can reach me on 01604 828 282 or by email on firstname.lastname@example.org
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