Wednesday, 20 February 2013

law report - "nominal" damages and costs

Williams v the Bermuda Hospital Board [2013] SC Bda 15 Civ

The Plaintiff had been awarded damages of $2,000 against the Hospital, the Defendant, and awarded the costs of the action. Hellman J had described the damages as "nominal"

The Defendant had applied to overturn the order for costs, on the grounds that when a Plaintiff has succeeded in obtaining only nominal damages, the usual costs order is that the Defendant is entitled to their costs.

Hellman J considered authority which indicated that nominal damages meant something which were not real damages at all, but which gave an entitlement to a judgment or verdict because your rights have been infringed [3]. This was not the same as small damages
Comment - for example, if somebody trespasses momentarily on your land you might be entitled to sue them and win, as your rights have been infringed, but as you have not suffered any real damage, the court would probably award legal costs to the trespasser.

Hellman J clarified that, when he used the term "nominal damages", he was not using it in its strict legal meaning, but was using it in the sense of "small" damages [4].

The Defendant submitted further that the Plaintiff had only obtained 1-2% of the amount claimed. However, the solution for a Defendant who believes a Plaintiff will only obtain a percentage of his claim is to pay the amount into court to protect itself from paying costs [9].

Further, when making a costs order, the Court is entitled to consider the effect that the award would have on the award of damages [11]. If it is the court's view that a party is entitled to a small award of damages, but then awards costs against the Plaintiff, then the result will be that the plaintiff is in debt to the Defendant.

Law report - claiming indemnity costs from other side

Femi Bada v Capcar Enterprises Ltd [2013] SC Bda 13 Civ

Comment - this case will be particularly interesting for landlords and tenants, as leases in Bermuda often contain an indemnity clause such as this.

The parties had had a contract dispute, and it was a term of the contract that the Appellant agreed to fully indemnify the Respondent for all legal costs incurred in enforcing the terms and conditions.

The outcome of the legal action was that the Respondent discontinued its claim against the Appellant and agreed to pay its legal costs to be taxed on a full indemnity basis.

Kawaley CJ held that this type of indemnity clause is designed to create a legal entitlement to compensate a party for all of its costs falling within the scope of the clause [17]. This differs from usual costs taxations, where all costs are considered on the basis of whether it is reasonable for the other party to pay them.

To deprive a party of their full costs would require exceptional circumstances, for example if the bill included time that was not spent, or did not reflect the terms on which the attorney was hired, or was clearly grossly inflated [22].