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Contributory negligence: paying the costs twice?

Two recent cases have highlighted the need for claimants to think carefully about the strategic approach to dealing with allegations of contributory negligence.

Not doing so may result in a reduced costs recovery, in addition to a reduction in the damages.

So what is the court's approach, and how can cost recoveries be maximised?

Background

In Lloyds Bank Plc v McBains Cooper and Barclays Bank Plc v Christie & Co, the lenders pursued professional negligence claims against a monitoring surveyor and property valuer respectively.

Both lenders claimed that they would not have entered into a loan transaction if the professionals' advice was not negligent.

As is very common with this type of claim, in their defences, both professionals argued that the lenders ought to have any damages award reduced as a result of their own contributory negligence.

At trial, the lenders were successful in their claims but the court reduced the damages awarded by one third and 40% respectively to reflect the court's conclusions about the lenders' own conduct.

Arguments as to costs

In both cases, the defendant professionals argued that, as they had been successful in achieving a reduction in the damages award through their contributory negligence arguments, there should be a reduction in the lenders' costs.

McBains Cooper argued that this reduction should be achieved by the court making an issues based cost order (i.e. an order that McBains Cooper be awarded its costs incurred relating to the issue of contributory negligence).

Christie & Co initially argued that there should be a reduction of 40% from the lender's costs to reflect the level of deduction achieved to the damages award. This stance was modified during arguments before the court to a reduction that reflected the costs attributable to the issue of contributory negligence, with Christie & Co arguing that 20% was a reasonable figure.

The court's approach

In Lloyds Bank Plc v McBains Cooper, the court ruled that it was not appropriate to make an issue based cost order because the allegations of contributory negligence were intertwined with issues of causation and ran through the entire period of the underlying loan. It was therefore disproportionate to expect a cost judge to isolate the costs attributable to contributory negligence, let alone expect the exercise to be done with any degree of reliability.

Instead, the court held that the defendant's success on contributory negligence should be taken into account when considering the overall cost order. In this regard, the Court held that the evidence from witnesses and lending experts would have been more confined had the bank made more realistic concessions at the outset in relation to contributory negligence. Such concessions, the court held, might have resulted in savings of about 10% of each party's costs.

The court therefore made an order depriving the Bank of 20% of its costs.

In Barclays Bank Plc v Christie & Co, the court decided that there should be no reduction in costs to reflect the defendant's contributory negligence success.

The court said it would be difficult to assess how much time and costs had been spent dealing with contributory negligence and considered that the costs attributable to the issue prior to the trial were likely to be a small percentage of the whole. This, coupled with the fact that the defendant had adopted an intransigent approach to settlement throughout, and had not sought to pre-position its costs arguments in relation to contributory negligence in correspondence, meant that the court was not minded to exercise its costs discretion in the manner contended by the defendant.

Practical tips to maximize cost recovery

The court has broad powers when determining what order for costs should be made following the conclusion of a case, including penalising an otherwise successful party.

The court may be reluctant to make an issues-based order for contributory negligence where the facts giving rise to such allegations are intertwined with other matters that need to be established at trial. The court may, however, be prepared to adopt a broad brush approach to achieve a fair outcome based on the parties' overall conduct of a case.

These cases serve as a reminder that parties should adopt a sensible and pragmatic approach to their case, accepting or conceding points upon which they are obviously doomed to fail.

In order to avoid a reduced or adverse costs order, claimants should consider whether to make appropriate concessions (on a without prejudice save as to costs basis) in relation to contributory negligence during the course of a claim.

A failure to do so could leave a claimant facing the double whammy of reduced damages and reduced costs.  

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2017. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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