In a recent High Court case (Hickman v Blake Lapthorn and David Fisher [2006] EWHC 12 (QB)), the judge was asked to consider whether one losing defendant (the second defendant) should pay all of the claimant's costs after the date when he had refused to mediate despite urging from the other losing defendant (the first defendant) or, alternatively, after the date of the claimant's final offer of settlement which had been refused.
Mr Justice Jack held that, although there was a strong probability that a settlement could have been achieved close to the sum actually awarded if there had been a negotiation, the main issue was whether the second defendant's view of his prospects was an unreasonable one and whether the first defendant could demonstrate that it was unreasonable. The judge held that it had not been demonstrated that the second defendant's position was unreasonable. Accordingly, the judge held he was not liable to pay all of the claimant's costs.
The judge refused to find that it was unreasonable to reject an offer that was higher than the claimant ultimately received at trial simply because the additional costs incurred to achieve that result greatly outweighed the saving. He said it cannot be right that, in order to avoid being vulnerable on costs, a defendant should always be prepared to pay more than he considers the claim is worth if the cost saving justifies it: that would enable a claimant to put undue pressure on a defendant to settle for more than the claim merits.
This case is particularly interesting for the heavy reliance placed on the "merits of the case" factor from the key judgment in this area of Halsey v Milton Keynes General NHS Trust [2004] 1 WLR and the judge's willingness to find that an outright refusal to negotiate was not unreasonable despite the "strong probability" that a negotiation would have been successful. It is also interesting for its consideration of the approach to take between two losing defendants rather than between a successful and an unsuccessful party.