COST PENALTY WARNING

Solicitors can be penalised on costs for failing to be realistic about their prospects of success, the High Court ruled in a recent shipping case.In Kinetics Technology v Cross Seas Shipping (the Mosconici), a cargo claim was settled before trial.

In the ensuing dispute about quantum, the claimant won an award just above a figure that the defendant had offered in settlement before the trial.Exercising its discretion on costs, the court examined the conduct of both parties closely.Despite the claimant recovering slightly more than the original settlement offer, it had not - in the court's eyes - succeeded in the main thrust of its argument.

The court therefore ordered that the claimant should pay two-thirds of the defendant's costs from the date that the offer had been made.A spokesman for London firm More Fisher Brown, which acted for the defendant, said: 'The decision is important because it shows that while every care must be taken properly to calculate a part 36 payment into court, if the shortfall between the payment in and the ultimate outcome is marginal then there is a real risk that the claimant's failure to accept that offer may be deemed unreasonable.'Norton Rose acted for the claimant.Peter Jackson, head of marine law at Hill Dickinson, said: 'Solicitors should take a commercial approach, rather than treating the case as just an exercise in litigation.'Jeremy Fleming