We have previously commented on the various stages of the Vardy v Rooney case (see links at the bottom of this article). In the final blog referred to in the preceding sentence, it was clear that the Court had found in favour of Coleen Rooney and that the only issue to be determined was how much legal costs Rebekah Vardy would have to pay.
The parties have unsurprisingly not been able to agree on the level of costs to be paid and accordingly the judge has determined the basis upon which costs should be assessed in that case and the amount of a payment on account of those costs should be made by Vardy to Rooney. Mrs Rooney apparently spent approximately £2m on costs in defending the action brought by Mrs Vardy.
In legal proceedings in England and Wales, whilst the judge in proceedings has the widest possible discretion to determine who should be responsible for the costs of proceedings, the usual rule is that the losing party pays the winning party’s costs. There are two bases for assessing such costs: the standard basis; and the indemnity basis. If there is nothing unusual in a case in terms of conduct or approach by the losing party, the Court will usually make an award in favour of the winning party on a standard basis, meaning that the winning party could usually expect to receive around 65% of the costs that they have paid in pursuing the matter to a conclusion.
Costs assessed on the indemnity basis are likely to be substantially more than this. This is largely because Part 44.3(3) CPR confirms that:
“Where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.”
The reader will no doubt appreciate that awards of indemnity costs are far rarer than awards of costs on a standard basis and there must therefore be something peculiar about a case, such as poor conduct by the losing party, for indemnity costs are awarded by a judge.
Vardy v Rooney is one such case. The judge found, in awarding costs on the indemnity basis, that:
“what takes this case out of the norm in a way which compels the conclusion that I should make an order for indemnity costs is that in my judgment following the trial I found that the Claimant (and also her former agent) had deliberately deleted or destroyed evidence”.
The judge further ordered Vardy to pay £800,000 as an interim payment towards her costs.
Whilst extreme, this case is a stark reminder that this sort of litigation is very expensive and accordingly it is essential that early advice is sought so that a party knows their prospects of success before committing themselves to proceedings.
How can Nelsons help
Kevin Modiri is a Partner in our expert Dispute Resolution team.
If you have any questions concerning the subjects discussed in this article, please do not hesitate to contact Kevin or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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