Indemnity costs: Claim was not necessary
A Bradford law firm has been ordered to pay indemnity costs after failing to obtain a court order forcing a rival firm to reveal who provided it with identical website copy.
Her Honour Judge Kelly, sitting as a High Court judge, said Umbrella Legal “had the very information which it sought” before issuing an application for a Norwich Pharmacal order against Affirm Legal.
She heard last summer that Umbrella used contractor Adnan Malik to work with Indian company HestaBit Technologies to develop a website for car finance mis-selling claims in 2021.
After a few months, Mr Malik stopped working for Umbrella without providing any indication or prior notice; two days later, having heard a rumour that Mr Malik was now working with Affirm Legal, an Umbrella director looked at Affirm’s website and found some of the wording that had been prepared for Umbrella.
Umbrella asked Affirm to remove the material, which it did promptly, saying it had innocently received the wording from its contractors.
Affirm agreed to provide the identity of the contractors by way of open letter but refused Umbrella’s request instead to produce a witness statement verified by a statement of truth, leading to the application for a Norwich Pharmacal order.
Refusing to grant the order, HHJ Kelly said Umbrella had narrowed down the likely provider of the web copy to either HestaBit or Mr Malik.
In the subsequent judgment on costs, HHJ Kelly said Umbrella “had not established that a wrong must have or arguably had been carried out”.
She went on: “I found that it would not have been necessary to make the order in any event because the defendant was offering to provide the identity of the alleged wrongdoer.
“Further, it was clear on the evidence that the claimant had narrowed the identity of possible wrongdoers to one individual and one company.
“The claimant had taken no steps to write to or otherwise contact either of the two possible wrongdoers to ascertain their position in respect of the alleged wrongdoing.”
HHJ Kelly said Umbrella argued that indemnity costs could not be justified because conduct out of ‘the norm’ did not include “pursuing a case which was bound to fail or refusing an offer of settlement”.
The law firm said the concept of out of ‘the norm’ must “carry the notion of conduct of which the court disapproves and wishes to mark that disapproval”.
Umbrella also argued that indemnity costs would have “a chilling effect on a litigant’s right to pursue his claim”.
However, HHJ Kelly said it was “an appropriate exercise of the court’s wide discretion in respect of costs” to order indemnity costs.
“In this case, not only had the defendant offered to provide the identity of the alleged wrongdoer, but the claimant was well aware (long before it issued the application) of the identity of the only two possible culprits, as well as which one of those two it considered to be the likely wrongdoer.”
This was not “a simple situation of over confidence in an application which then failed, nor one of failing to accept an offer to settle” – there was “something more to this factual matrix” in the shape of an aggravating factor which moved it outside the norm.
HHJ Kelly explained: “Before issuing this application, the claimant had the very information which it sought. In that situation, I do not accept that issuing the application could be said to be a necessary or proportionate step to identify the wrongdoer.”
She also quoted her suggestion in the main ruling that the application had been “more directed at furthering the claimant’s position in its dispute with Mr Malik about the consultancy agreement”.
We have approached Umbrella Legal for comment.
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