Vardy v Rooney shines a light on the costs implications of destroying evidence

Following Rebekah Vardy's defamation claim against Coleen Rooney being dismissed by the High Court in June, the case hit the headlines again earlier this month when Vardy was ordered to pay Rooney's legal costs. Mrs Justice Steyn's judgment on that issue serves as a stark reminder of the consequences of destroying evidence.

Percentage of costs awarded

The parties were agreed that Vardy should pay Rooney some of her costs, but while Rooney believed that Vardy should pay 100% of her costs, Vardy believed that she should only be required to pay 80%. Vardy took this position because:

1. Rooney was unsuccessful on three parts of her truth defence,
2. Rooney made a late concession that her Instagram post had caused serious harm, and
3. Rooney's public interest defence failed.

Mrs Justice Steyn agreed that those matters did warrant a deduction in the costs payable by Vardy to Rooney but only of 10%.

That decision serves as a reminder to parties of the risks of taking bad points in pleadings and of making late concessions, both of which can be wasteful of costs.

Basis of assessment

The basis on which Rooney's costs should be assessed also had to be decided by Mrs Justice Steyn.

The "standard basis" for costs assessment is that all costs that are reasonably incurred and in a reasonable amount are recoverable, save that the costs that are disproportionate may be disallowed or reduced with the presumption of proportionality favouring the paying party i.e., Vardy. Vardy sought an order in these terms.

The "indemnity basis" of assessment is less frequently awarded. The courts will make such an order to penalise the unsuccessful party for wrongful behaviour that is "out of the norm". It means that when costs are assessed, all costs that are reasonably incurred and in a reasonable amount are recoverable, but the presumption of proportionality will be in favour of the receiving party i.e., Rooney. Rooney sought an order in these terms.

Mrs Justice Steyn concluded that due to Vardy and her former agent having "deliberately deleted or destroyed evidence", Vardy must pay Rooney's costs on the indemnity basis.

Mrs Justice Steyn's decision to punish Vardy for having deliberately deleted or destroyed evidence with an indemnity costs order will cost Vardy greatly. A party who is ordered to pay costs on an indemnity basis can expect to be required to pay up to 30% more of the opposition's costs than a party who is required only to pay those costs on the standard basis. In Vardy's case, that could mean that she is required to pay Rooney up to £450,000 more than if an order for assessment on the standard basis had been made.

Parties are required to preserve all disclosable documents as soon as litigation is contemplated. The consequences of failing to do so have been no better demonstrated than in this case where: (i) adverse inferences were drawn as to the contents of deleted or destroyed documents, which severely damaged Vardy's case; and (ii) the court ordered that Vardy pay Rooney's costs on the indemnity basis as a direct result. In some other cases where parties have been found to have destroyed evidence, their claims have been struck out in their entirety.