Fitzpatrick Contractors Ltd v Tyco Fire & Integrated Solutions (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE COULSON |
| Judgment Date | 13 June 2008 |
| Neutral Citation | [2008] EWHC 1391 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-07225 |
| Date | 13 June 2008 |
[2008] EWHC 1391 (TCC)
Mr. Justice Coulson
Case No: HT-07225
IN THE HIGH COURT OF JUSTICE
TECHNOLOGY AND CONSTRUCTION COURT
QUEEN'S BENCH DIVISION
St. Dunstan's House
133137 Fetter Lane
London, EC4A 1HD
Mr. Bernard Livesey QC and Mr Paul Sutherland (instructed by Messrs. Maxwell Winward LLP) for the Claimant
Mr. David Thomas QC and Mr. Jonathan Lee (instructed by Messrs. Cobbetts LLP) for the Defendant
No. 2 (Costs)
Introduction
I have today handed down Judgment on the preliminary issues that arose between the parties (Neutral Citation Number [2008] EWHC 1301 (TCC)). The preliminary issues concerned the nature, scope and construction of the terms of the sub-contract between the parties. My conclusions were very largely in accordance with the case put forward by the claimant (whom I shall call “Fitzpatrick”) and rejected the construction case put forward by the defendant (whom I shall call “Tyco”). Fitzpatrick, therefore, have been substantially successful.
Entirely properly, so it seems to me, Tyco accept that, in consequence of that Judgment, they should pay at least the bulk of Fitzpatrick's costs of the preliminary issues hearing. There are, however, three disputes remaining between the parties which I resolve by way of this ex tempore Judgment. The first is that Fitzpatrick seek an order that their costs be assessed on the indemnity basis, which Tyco resist. Secondly, Tyco seek a reduction of 20% in the total bill of costs to reflect their success on the formulation of certain implied terms and my conclusions as to the proper construction of clause 3(4), an issue which took a relatively large amount of the court time, particularly during the period after the original hearing in March. Thirdly, there is the amount of the interim payment due to Fitzpatrick on account of their costs.
Principles Relating to Indemnity Costs
There is no issue between the parties as to the appropriate principles to be applied in applications for indemnity costs orders. They can be summarised as follows:
(i) Indemnity costs are no longer limited to cases where the court wishes to express disapproval of the way in which the litigation has been conducted. An order for indemnity costs can be made even where the conduct could not properly be regarded as lacking in moral probity or deserving of moral condemnation (see Reid Minty v Taylor [2002] 1 WLR 2800).
(ii) However, such conduct would need to be unreasonable “to a high degree. 'Unreasonable' in this context certainly does not mean merely wrong or misguided in hindsight” (see Simon Brown LJ (as he then was) in Kiam v. MGN Limited No. 2 [2002] 1 WLR 2810).
(iii) It is always important for the court to consider each case on its facts and to decide whether there is something in the conduct of the action or the circumstances of the case in question which takes it out of the norm in a way which justifies an order for indemnity costs (see Waller LJ in Excelsior Commercial & Industrial Holdings Ltd v. Salisbury Hammer Aspden and Johnson [2002] EWCA (Civ) 879).
(iv) Examples of conduct that has led to such an order for indemnity costs include the use of litigation for ulterior commercial purposes (see Amoco (UK) Exploration v. British American Offshore Ltd. [2002] BLR 135) and the making of an unjustified and personal attack on one party by the other (see Clark v. Associated Newspapers (unreported) 21 st September 1998).
(v) There are a number of decisions, both of the TCC and of other courts, which make plain that the pursuit of a weak claim will not usually, on its own, justify an order for indemnity costs, whereas the pursuit of a hopeless claim (or a claim which the party pursuing it should have realised was hopeless) will lead to such an order. In both Wates Construction Ltd. v. HGP Greentree Allchurch Evans Ltd. [2006] BLR 45 and EQ Projects Ltd. v. Javid Alavi [2006] BLR 130 this court was persuaded that, in the circumstances of those cases, an order for indemnity costs was appropriate because the claimants should have realised that their claim was hopeless and should not have taken the matter on to trial. However, in Healy-Upright v. Bradley & Another [2007] EWHC 3161 (Ch), the court reiterated that an order for indemnity costs was not justified by the mere fact that the paying party had been found to be wrong, either in fact or in law or both, or by the fact that in hindsight, the result of the case now being known, the position adopted by that party may be thought to have been unreasonable.
The Parties' Submissions
Fitzpatrick make a number of points in support of their claim for an order for indemnity costs. First, they say that Tyco deliberated exploited the absence of a signed contract. They point to the fact that the original letter of award of 7 th May was not signed and returned by Tyco and they say that thereafter, although on the face of the documents a contract had been agreed and had been sent for signing to Tyco, Tyco failed to sign the documentation. Secondly, Fitzpatrick say that, once Tyco had belatedly accepted that there was a subcontract between the parties, they were always going to be in severe difficulties in being able to demonstrate that its terms were in the form for which they contended (which was radically different to the form relied on by Fitzpatrick). Thirdly, Fitzpatrick say that Tyco's case, principally relating to the alleged first meeting on 24 th April 2002, was a case that was made years after the event and was wholly inconsistent with the documents; it was a case that was supported by the factual evidence of Mr. Ward, which evidence I rejected for a variety of reasons.
In response, Tyco say that this is not a case where indemnity costs are appropriate. They accept that they lost the preliminary issues, and that is why they have agreed that I should make a costs order against them. However, they do not accept that their...
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