20/07/2016

As we are now approaching the time of year when we all jet off on our summer holidays, I wanted to remind those of you involved in any type of dispute, whether in the High Court or County Court or even a different Tribunal, that it is indeed good to talk.

A recent High Court case involving passengers suing an airline for the grounding of flights upon which they were booked, has raised the question once again as to how important it is to discuss, negotiate or even mediate the dispute early on before litigation costs escalate and parties’ attitudes become entrenched. These basic principles apply to all types of cases and are particularly pertinent to construction disputes where costs tend to escalate at an alarming rate the longer the dispute is litigated.

The group of Claimant passengers technically won their case on the basis that they received ‘a cheque’ and the airline was ordered to pay their costs. However because the Claimants had predominantly lost every one of their list of issues the Court had to consider whether despite having won a pyrrhic victory, they should recover their costs.

I should mention here that the Court has a wide discretion on costs and can deprive a winning party of some or most of its costs or order a losing party to pay only a fraction of its opponent’s costs, based on their conduct both before and during the proceedings.

The Claimant group argued that despite their pyrrhic victory, they ought to receive their costs due to the conduct of the airline because the airline failed to engage in any pre-action correspondence, failed to respond in any way to offers made by the Claimant group and rejected all suggestions of settlement, negotiation or alternative dispute resolution immediately before Trial.

The High Court Judge had a difficult decision to make but made it very clear in her Judgment that this type of case was crying out for some sensible attempt at negotiation before costs racked up and the parties’ attitudes hardened. The Court criticised the airline because it had not engaged in any pre-action correspondence and had not shown any willingness to settle: it had made no counter-offer to what was admittedly a high offer from the Claimants.

Consequently the Court felt that the airline should have agreed to an early meeting as early meetings and discussions often focus the minds of parties and lead, not always to settlement, but to a narrowing of issues which could have saved a majority of the costs in this matter. The Court felt that airline had made no effort whatsoever to settle, preferring to see the Claimants in Court.

This archaic behaviour by the airline was taken into consideration by the Court when it came to assessing costs. The Court therefore ordered the airline to pay a percentage of the Claimants’ costs because it had failed, quite simply, to talk to the Claimant group.

Therefore, the moral of the story is that it is indeed good to talk, no matter how strong a case you feel you have and no matter how strong your principles are – in fact it is probably essential in our era of modern dispute resolution.

If you require any assistance with this or any aspect of dispute resolution law, please call Karen Elder on 01782 205000 or karen.elder@beswicks.com