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Cayman Islands Grand Court revisits principles concerning indemnity costs and costs sanctions

As is the case in many offshore jurisdictions, the default position in the Cayman Islands is that costs follow the event: the successful party will, in the ordinary course, recover their reasonable costs from the unsuccessful party. There are exceptions to this general rule, including where an act or omission has been carried out improperly, unreasonably or negligently. In such cases the Court has a wide discretion to disallow costs, to order that they be paid by the successful party to the unsuccessful party and/or to order that they be assessed on the indemnity (rather than the standard) basis.

Each of these costs sanctions has recently been applied by the Grand Court within the context of (extremely) long running personal injury proceedings (Gary James v Woods Furniture & Design). Of particular note is the statement of Justice Kawaley concerning the Court’s obligation “not to shirk its responsibilities” to impose costs sanctions “without fear or favour” should it transpire, at the end of a given case, that the parties have failed to discharge their procedural duty to assist the Court with the effective management of the case consistent with the Overriding Objective.

In this respect, the learned Judge also acknowledged that an assessment of the way litigation has been conducted when it comes to the issue of the costs necessarily entails taking into account the merits as determined at trial. Accordingly, the Plaintiff would be awarded its indemnity costs in relation to contesting a “fantastical” contributory negligence defence that had been advanced by the Defendant without adducing any positive evidence in support.

In addition:

  • The Plaintiff would also be awarded indemnity costs in respect of the Defendant’s failure to admit liability in order to save costs and facilitate the Plaintiff’s treatment (of his injury), in circumstances where it had already implicitly admitted liability out of Court. Such “stonewalling tactics” would clearly constitute a breach of the requirements of the Overriding Objective.
  • The Plaintiff’s costs in relation to quantum issues in respect of a certain period would however be reduced by 50% to reflect his failure to comply with two Court Orders requiring further witness statements. Such conduct was not only improper in and of itself, but also undermined the efficiency of trial preparations and helped to obscure the lack of merit in the Plaintiff’s loss of earnings claims.
Cayman Islands Grand Court revisits principles concerning indemnity costs and costs sanctions

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