Costs Follow the Event | No Reduction For Refusal To Mediate When Positions Were Polarised

ASSENSUS LTD V WIRSOL ENERGY LTD (RE CONSEQUENTIAL MATTERS) [2025] EWHC 503 (KB)

In Assensus Ltd v Wirsol Energy Ltd, the High Court comprehensively addressed consequential matters following a judgment where Assensus’s claims against Wirsol were entirely rejected. Assensus sought to limit Wirsol’s recoverable costs to 70%, primarily arguing unreasonable conduct in refusing mediation. Drawing on authorities such as Halsey and Gore, the court rejected this submission, finding no unreasonable behaviour by Wirsol in declining alternative dispute resolution. The court determined that costs should follow the event, ordering Wirsol’s costs on a standard basis with minor supplementary orders. An interim costs payment of £407,913.39 was awarded based on approved budgeted and non-budgeted costs. The court also rejected Assensus’s application for permission to appeal, finding no reasonable prospects of success across four proposed grounds. Additionally, the application for a stay of execution was dismissed, with the court finding insufficient evidence that the costs order would stifle any potential appeal.

In Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576; [2004] 3 Costs LR 393, the Court of Appeal held that in deciding whether to deprive a successful party of some or all of his costs on the grounds that he has refused to agree to ADR, it must be borne in mind that such an order is an exception to the general rule that costs should follow the event. The burden is on the unsuccessful party to show why there should be a departure from the general rule.

Citations

Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 A successful party’s refusal to engage in ADR does not automatically warrant a costs penalty; the burden is on the unsuccessful party to demonstrate that the refusal was unreasonable considering factors such as the merits of the case and prior settlement attempts. Gore v Naheed [2017] EWCA Civ 369 A party’s election to have its rights determined by the court rather than through ADR does not, in itself, constitute unreasonable conduct justifying a costs sanction, especially when its position is ultimately upheld. PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288 A failure to respond to an invitation to mediate may constitute unreasonable conduct and justify a costs penalty, even if a mere refusal to mediate does not automatically result in sanctions. OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195 Parties are expected to engage constructively in settlement negotiations, and a complete refusal to negotiate or mediate may be penalised through costs to discourage obstructive conduct. Involnert Management Inc v Aprilgrange Ltd [2015] EWHC 2834 (Comm) The court routinely exercises its discretion to award interest on costs at a commercial rate from the dates when costs were incurred until the judgment date. MacInnes v Gross [2017] 4 WLR 49 The approved costs budget serves as the primary reference for assessing interim payments on account of costs, with a 10% deduction applied in most cases to account for contingencies. Cleveland Bridge UK Ltd v Sarens UK Ltd [2018] EWHC 827 (TCC) Costs incurred outside an approved budget are typically subject to a more substantial deduction when determining an interim payment, often in the range of 30%. Hincks v Sense Network Ltd [2018] 3 Costs LR 511 A party seeking a stay of execution must provide evidence proving that immediate enforcement would stifle an appeal; a mere assertion of financial difficulty is insufficient.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

The general rule that costs follow the event may be departed from only if the unsuccessful party demonstrates that the successful party acted unreasonably, such as by refusing Alternative Dispute Resolution (ADR), and even then, such a departure is discretionary. [3-4]
A refusal to mediate is not automatically unreasonable unless it can be shown that mediation had a realistic prospect of success, taking into account the nature of the dispute, the parties’ positions, and prior settlement offers. [6-8]
Where costs are awarded on a standard basis, the court will not make reductions for costs associated with amendments to pleadings unless those costs are significant or caused unnecessary expense. Instead, specific costs orders may be made in respect of such amendments. [9]

Interest on costs is generally awarded at 2% above the Bank of England base rate until one month after service of a detailed bill, after which the court may order the statutory judgment rate of 8%. However, where large amounts of costs fall outside an approved costs budget, the court may extend the period before the judgment rate applies to allow the paying party time to assess the bill. [11-13]
When ordering an interim payment on account of costs, the court will normally allow 90% of budgeted costs and apply a higher discount (typically 30-40%) to non-budgeted incurred costs, as a safeguard against potential reductions on detailed assessment. [16-17]

In Gore v Naheed [2017] EWCA 369; [2017] 3 Costs LR 509, the Court of Appeal, in a passage referred to in the White Book and relied upon by Ms Box, for Wirsol, identified 'some difficulty' in accepting that the desire of a party to have his rights determined by a court of law in preference to mediation can be said to be unreasonable conduct particularly when, as here, those rights are ultimately vindicated.

Key Findings In The Case

Assensus Limited’s claims, including its asserted entitlement to a £2.5 million bonus, failed entirely. The court found that there was no contractual or other basis for the claimed bonus. [1]
The Defendant, Wirsol Energy Ltd, acted reasonably in declining mediation. The court concluded that, given the wide gap between the parties’ positions and offers, mediation had little realistic prospect of success. Consequently, Assensus was not entitled to any cost reduction on this ground. [6-8]
The court ordered that costs follow the event, awarding Wirsol 100% of its costs, save that it had to bear the costs of its own amendment to the Defence. Costs were awarded on the standard basis, and there was no deduction for the Claimant’s amendment to its Reply. [9-10]

The Claimant failed in its argument that there was an implied term entitling it to a bonus based on quantum meruit or unjust enrichment. The pleaded case did not establish a legally necessary entitlement to any further remuneration beyond the contractual arrangements. [21-25]
A stay of execution was refused because Assensus failed to provide sufficient evidence that paying the interim costs order would stifle its ability to appeal. The court found that the Claimant’s financial position, including its ATE insurance, did not justify a stay. [28-33]

Although the Claimant focuses on the various invitations to mediate which were not taken up by the Defendant, this is not a case where Wirsol made no attempts at settlement. Mediation was proposed by Assensus on a number of occasions prior to the issue of proceedings. Although Wirsol did not accept these invitations, it made a Part 36 Offer of £100,000 in November 2022. This is a meaningful sum, in light of Assensus' entitlement as it has been found to be. Assensus also made a Part 36 Offer in October 2022 of £1,041,589 (excluding costs). The question is not, as Mr Khan put it at one point, whether the Assensus' rejection of Wirsol's offer was reasonable; it is whether the conduct of Wirsol was unreasonable. There was a large gulf between the parties. Making, and then standing by, a reasonable offer was patently not unreasonable conduct in light of the ultimate Judgment.

Background

Assensus Limited (‘Assensus’) initiated proceedings against Wirsol Energy Limited (‘Wirsol’) over an alleged entitlement to a performance-related bonus of approximately £2.5 million. Assensus’ claim was based on a contractual agreement which it argued entitled it to the bonus for its work on certain projects, including the Cleve Hill project. The trial involved detailed examination of factual and expert evidence relating to the existence and scope of the alleged contractual entitlement. In the judgment handed down on 26 February 2025, the court dismissed all claims brought by Assensus.

Following the main judgment, various consequential matters were remitted to Mr Justice Constable for determination, including costs, interest on costs, interim payment of costs, the Claimant’s application for permission to appeal, and stay of execution pending appeal. These matters were determined based on written submissions from both parties.

Costs Issues Before the Court

The primary costs issue revolved around the general rule that costs follow the event, as per CPR r.44.2. Assensus, the unsuccessful party, accepted its liability for costs but contended that Wirsol should only receive 70% of its costs due to its refusal to mediate. Key authority cited includes Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, which establishes that depriving a successful party of costs due to refusal to mediate requires the unsuccessful party to prove that such refusal was unreasonable. Further reliance was placed on Gore v Naheed [2017] EWCA 369 and PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288 which elaborate on whether refusal to mediate can be considered unreasonable.

The Parties’ Positions

Claimant’s Position: Assensus argued that Wirsol’s rejection of mediation invitations, both pre-litigation and during proceedings, was unreasonable. Assensus referenced authorities such as OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195 to support the contention that parties must engage constructively in settlement processes. Assensus also raised issues related to contentious amendments in pleadings, arguing these should affect cost liability.

Defendant’s Position: Wirsol maintained that, as the successful party, it should receive its full costs. It contended that its refusal to mediate was reasonable given the polarised positions and unlikelihood of resolving the dispute via ADR. Wirsol cited Gore v Naheed to argue that choosing court adjudication over mediation is not inherently unreasonable. Furthermore, Wirsol highlighted its Part 36 Offer of £100,000 as evidence of genuine settlement attempts, countering the claim that no efforts were made to resolve the matter amicably.

The Court’s Decision

Reduction in Costs: The court reaffirmed the general principle that costs follow the event. After evaluating the specifics of the case and authorities cited, the court found Wirsol’s refusal to mediate was justified. The positions of both parties were highly disparate, and mediation was unlikely to bridge the gap. Additionally, the court recognised Wirsol’s Part 36 Offer as a valid attempt at settlement, further diminishing the justification for a costs reduction based on refusal to mediate.

Interest on Costs: The court ordered interest on costs as per Wirsol’s request, granting 2% above the Bank of England base rate from the date costs were paid until one month after the delivery of a detailed bill of costs to Assensus, followed by the Judgments Act rate of 8%. However, due to a considerable proportion of costs falling outside the approved budget, the court allowed two months for the assessment of the detailed bill before the higher interest rate applied.

Interim Payment of Costs: The court assessed an interim payment based on realistic calculations. Considering both budgeted and non-budgeted phases of incurred costs, the court allowed 90% recovery for budgeted phases up to £256,369.39 and 60% for non-budgeted phases leading to £151,543.90. Consequently, the total interim payment ordered was £407,913.39.

Permission to Appeal and Stay of Execution: The application for permission to appeal was thoroughly examined. The grounds including errors in fact and law, claims of quantum meruit, unjust enrichment, and issues regarding Invoice 176 were all reviewed. The court found none had a realistic prospect of success. The request for a stay of execution pending appeal was also denied, as insufficient evidence was provided to demonstrate that such an order would stifle the appeal.

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