Law Society Escapes Indemnity Costs Despite “Deeply Unimpressive” Conduct

In Socrates Training Limited –v- The Law Society of England and Wales [2017] CAT 12 the Competition Appeal Tribunal’s (CAT) have ruled that there were no grounds for an indemnity costs order and that the Claimant was confined to the cap imposed by their approved costs budget, despite describing the Law Society’s conduct as “deeply unimpressive.”

The costs ruling follows the main Judgment last month which found that the Law Society had abused its dominant position by requiring law firms to buy the society’s own anti-money laundering and financial crime training in order to maintain their Conveyancing Quality Scheme (CQS).

In the costs ruling the CAT dealt with the Claimant’s request for indemnity costs and the argument that the costs should not be subject to the cap of their approved Costs Budget on the basis that the Law Society had failed to disclose documentation before Trial. The Claimant argued that they should be entitled to additional costs as a result of the disclosure of documents following the Trial.

The disclosure concerned minutes of the management board and a business case. The Defendant had previously been ordered to disclose “all policy documents and business plans relating to the inceptions of the CQS” in so far as it came across them while preparing its witness statement evidence.

The Defendant’s explanation for failing to disclose the documents was that the same were not identified or relied upon when preparing the witness statement evidence and accordingly were not disclosed.

Roth J stated that “Although the Law Society was not technically in breach of the Tribunal’s order, these documents clearly should have been identified” and that the explanation for not disclosing the documents earlier was “not merely regrettable… but deeply unimpressive.”

It was, however, decided that “if the business case had been disclosed when it should have been, the work that was done by [the Claimant] after trial would have been done in the preparation for trial” and such work was “very much part of the trial work that was envisaged when the costs cap was imposed and revised.” Accordingly it was not felt that the failure to disclose the documents had caused such a serious increase in costs that would justify taking the case out of the norm so as to entitle indemnity costs or allow additional costs over and above the amount of the cap.

Accordingly, the Defendant was ordered to pay the costs on the standard basis and that as a result the Claimant was subject to the cap provided by the approved costs budget of £230,000.00.

Although costs on the indemnity basis are subject to the discretion of the Court this case illustrates the high threshold often applied in achieving an award for the same, in addition to departing from an approved costs budget. Here at MRN should you feel you may have a case for seeking indemnity costs or departing from an approved budget, our experienced team of experts are able to provide advice in these difficult areas of costs law.