Background: The appellants claimed that the first respondent drove his van into their car. The first respondent denied this and alleged that the first appellant pulled out from a parked position into the side of the van.
Lower Courts’ Decisions:
The appellants’ claims were initially denied by the first respondent’s insurer, Axa (the second respondent). The respondents sought, but were refused, permission to amend the defence to allege fundamental dishonesty. Ultimately, the trial judge found in favour of the appellants largely based on the testimony of an independent witness, Mr. Bigesh Patel. The judge did not expressly address the suggestions of fraud and dishonesty but resolved the case as a straightforward RTA claim.
The issue of fundamental dishonesty was revisited during the costs debate, where the appellants sought indemnity costs for a period due to the defendants’ conduct in alleging fundamental dishonesty and in persisting with the allegation. The trial judge awarded the relevant costs on the standard basis, indicating that the defendants’ conduct did not warrant an exception to the norm despite the allegations made.
Appeal:
The appellants appealed against the decision of Richard Smith J, which upheld the trial judge’s refusal to make an order for indemnity costs against the respondents. The key question was whether the court should recognise a presumption of or default entitlement to indemnity costs when a defendant unsuccessfully alleges fundamental dishonesty in Commercial and Chancery cases.
Court of Appeal’s Decision:
The Court of Appeal, led by Lord Justice Coulson, dismissed the appeal. It was determined that there is no default entitlement or presumption in favour of indemnity costs for a claimant who has defeated allegations of fraud or dishonesty. The decision to award indemnity costs remains at the discretion of the trial judge, based on the circumstances of the case. It is perfectly reasonable to take the failed allegation as a starting point when considering all of the circumstances, but that is far from saying that there is an automatic rule or presumption in one direction or another: the judge retains complete and unfettered discretion.
Key Points: The judgment emphasizes the wide discretion judges have in awarding costs and rejects the notion of a default position or presumption affecting this discretion. It also clarifies that the failure of a dishonesty allegation does not automatically lead to indemnity costs against the defendant, although it often may result in such an order.
Link to judgment: Thakkar & Ors v Mican & Anor [2024] EWCA Civ 552 (20 May 2024) (bailii.org)
Tags: indemnity costs, costs order
