Zagora Management Limited v Zurich Insurance Plc And Others - Costs

Judge provides useful insight into admissible, non-Part 36 offers in its recent costs decision in Zagora Management Limited v Zurich Insurance Plc and Others [2019] EWHC 257 (TCC), the High Court has provided useful insight into the weight given to admissible, non-Part 36 offers to settle when calculating costs. In particular, the judgment highlights conduct that should be avoided by all parties, whether they are giving or receiving offers. The decision also provides much-needed guidance on the relevance of "near miss" offers in this context.

Details of the underlying case can be found here, but for the purposes of this costs decision that main judgment can be summarised briefly:

All of the Claimants ("the ZBC Claimants") who sued the Second Defendant ("ZBC") lost their claims against it, although the ZBC Claimants succeeded in establishing that ZBC had been guilty of deceit. Similarly, the first Claimant freeholder ("Zagora") lost its claims against the First Defendant and Third Defendant (collectively "ZIP"). The remaining individual leaseholder Claimants ("the Leaseholder Claimants") succeeded in securing a substantial judgment amounting to over £3.6m plus interest of just under £700k (totalling over £4.3m). The costs in relation to (1) above are considered first, then (2) and (3) are considered together.

ZBC Claimants v ZBC

In attempting to calculate costs for this part of the dispute, Davies HHJ noted a handful of opposing factors. On the one hand, the ZBC Claimants had proved in the main judgment that ZBC was guilty of deceit. They therefore argued that, while they had lost overall, this deceit should justify a departure from the normal rule that costs follow the event. On the other hand, not only had ZBC been successful but it had also made an admissible offer to settle the claim, inclusive of costs, for £250,000. ZBC argued that the ZBC Claimants' insistence on continuing with their ultimately unsuccessful case was unreasonable in the face of this offer.

Ordinarily, when calculating costs the Court will take into account an offer to settle where the offeree has not bettered that offer in the final judgment. However, the unsuccessful ZBC Claimants argued that this should not be the case here, for two reasons. First, the offer constituted only a "trifling amount"; and second, it did not contain any admission or apology for ZBC's deceit.

Despite these contrasting arguments, Davies HHJ came to a number of clear conclusions. He was...

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