Question: Can unreasonable behaviour be punished twice in fixed costs cases?
Answer: CPR 45.13 allows the court to penalise a party who is found to have behaved unreasonably by reducing their costs by 50% if the unreasonable party is the receiving party or increasing the other party’s costs by 50% if the unreasonable party is the paying party.
The rule does not, as it might, require the unreasonable behaviour to have caused additional costs to the other side.
The two elements of CPR 45.13 are drafted as entirely standalone provisions:
“(1) Where, in a claim to which Section VI, Section VII or Section VIII of this Part applies, an order for costs is made in favour of a party whom the court considers has behaved unreasonably, the other party may apply for an order that those costs be reduced by an amount equivalent to 50% of the fixed recoverable costs which would otherwise be payable.
(2) Where, in a claim to which Section VI, Section VII or Section VIII of this Part applies, an order for costs is made against a party whom the court considers has behaved unreasonably, the other party may apply for an order that those costs be increased by an amount equivalent to 50% of the fixed recoverable costs which would otherwise be payable.”
It will not be uncommon for both parties to have a costs order in their favour where the defendant succeeds on a Part 36 offer. The claimant will normally have their costs up until expiry of the relevant Part 36 period and the defendant will have their costs thereafter.
What if the claimant is also found to have behaved unreasonably during the claim? Given the wording of the rule, there appears to be nothing to prevent the defendant applying to have the claimant’s costs reduced by 50% and their own costs increased by 50%.