Hammersmatch Properties (Welwyn) Ltd v Saint-Gobain Ceramics and Plastics Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Ramsey |
| Judgment Date | 24 July 2013 |
| Neutral Citation | [2013] EWHC 2227 (TCC) |
| Docket Number | Case No: HT-11-209 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 24 July 2013 |
[2013] EWHC 2227 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon Mr Justice Ramsey
Case No: HT-11-209
Judith Jackson QC (instructed by Thomas Eggar LLP) for the Claimant
Nicholas Dowding QC & Elizabeth Fitzgerald (instructed by Shulmans LLP) for the Defendants
Judgment Number 2
Introduction
These proceedings involve a claim for dilapidations by the Claimant ("Hammersmatch") against the First Defendants ("Saint-Gobain") on the termination of a lease of the Norton Building in Welwyn Garden City.
In my previous judgment I awarded Hammersmatch £900,000 as damages which were limited by s.18(1) of the Landlord and Tenant Act 1927 ("the 1927 Act") to the value of the diminution of the reversion. In addition I awarded Hammersmatch the agreed cost of schedules of £20,320.40. Together with interest the total sum awarded was £1,058,768.00.
In this judgment I now deal with the questions of costs arising out of that judgment.
Effect of Saint-Gobain's second Part 36 offer
It is common ground that there is no offer under CPR Part 36 which has any automatic costs consequences. Saint-Gobain did however make a Part 36 offer by letter dated 23 December 2011 in the sum of £1,000,000. If interest is added to the sum of £900,000 and £20,320.40 up to 13 January 2012, the last date of acceptance of the Part 36 offer, the sum awarded to Hammersmatch exceeds Saint-Gobain's Part 36 offer by £3,637.90, which represents a very small percentage of the sum offered.
Under CPR 36.14, as amended on 1 October 2011 by the insertion of CPR 36.14(1)(A), Hammersmatch has not failed to obtain a judgment more advantageous than Saint-Gobain's Part 36 offer and therefore Rule 36.14 does not apply. The provisions of CPR36.14(1A) state
" (1A) For the purposes of paragraph (1), in relation to any money claim or money element of a claim "more advantageous" means better in money terms by any amount, however small and "at least as advantageous" shall be construed accordingly."
In Carver v BAA Plc [2008] EWCA Civ 412 the Court of Appeal considered a case where there had been a Part 36 payment into court of effectively £4,520. By making allowance for interest the judgment exceeded the payment in by £51. The judge at first instance held that the monetary judgment was not "more advantageous" than the Part 36 payment and this was upheld by the Court of Appeal. Ward LJ giving the judgment with which the other members of the court agreed said at [30] that the words more advantageous permitted " a more wide-ranging review of all the facts and circumstances of the case in deciding whether the judgment, which is the fruit of the litigation, was worth the fight."
In the Final Report of the Review of Civil Litigation by Lord Justice Jackson he said this at paragraph 2.9 of Chapter 41 by way of a conclusion:
" I confirm my provisional view expressed in the Preliminary Report that Carver introduces an unwelcome degree of uncertainty into the Part 36 regime and also that it tends to depress the level of settlements. I recommend that the effect of Carver should be reversed either judicially (if an early opportunity arises) or by rule change. It should be made clear that in any purely monetary case "more advantageous" in rule 36.14(1)(a) means better in financial terms by any amount, however small.
That led to recommendation 93 in the Final Report. The amendment in CPR36.14(1A) was implemented to give effect to that recommendation. This means that there are no automatic costs consequences in this case. However offers are also relevant to the question of whether a court should depart from the general rule that "the unsuccessful party will be ordered to pay the costs of the successful party under CPR44.2(2)(a) and make "a different order" under CPR44.2(2)(b). It is therefore necessary for me to consider the effect of the Part 36 offer in that context.
Under CPR 44.2(4), in deciding what order to make the court has to have regard to all the circumstances including:
" (a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply."
I therefore turn to consider the matters relied upon by the parties in this case, including Saint-Gobain's second Part 36 offer.
Summary of submissions
On behalf of Hammersmatch Ms Judith Jackson QC submits that Saint-Gobain's conduct it to be criticised. She submits that Saint-Gobain failed to respond properly to Hammersmatch's case under the Protocol on Dilapidations which represented best practice at the time. She says that Saint-Gobain failed to articulate its case on diminution in value until some two months before trial or to respond to the schedule of dilapidations until late 2011 or early 2012. She submits that there was no exaggeration in the claim by Hammersmatch but rather that the finding as to the value of diminution in value fell between the values contended for by the parties.
She submits that whilst the second Part 36 offer by Saint-Gobain was close to the figure awarded, it was made at a time when Hammersmatch could not properly assess Saint-Gobain's case because of the failures of Saint-Gobain properly to articulate its case.
On this basis she submits that there is no basis for departing from the general rule and that therefore Hammersmatch should be entitled to its costs in full against Saint-Gobain.
On behalf of Saint-Gobain Mr Nicholas Dowding QC, who appears with Ms Elizabeth Fitzgerald, submits that Hammersmatch's claims were exaggerated from the start in terms of the cost of works in the schedule of dilapidations which Hammersmatch said was the appropriate measure of damages for this dilapidations claim. He also says that Hammersmatch's claim for diminution value was exaggerated and in excess of the sum ultimately awarded.
He also submits that Hammersmatch pursued a claim for loss of rent and insurance and that it was only at a late stage that Hammersmatch accepted that these sums were covered by the cap on damages under s.18 of the 1927 Act. He says Hammersmatch also continued to assert an intention to carry out works and that this issue led to unnecessary evidence and submissions which added to the cost. He also refers to the costs which were incurred by Mr Ansell, the building surveyor instructed by Hammersmatch, in preparing a late supplementary report on windows and contends that the costs related to this report should not, in any event, form part of the costs of the case.
He submits that Saint-Gobain succeeded and Hammersmatch did not succeed on a number of important issues including the cost of works, whether the cap under s.18 of the 1927 Act applied, the proper value of diminution in value and the claim for loss of rent and insurance.
In addition he submits that the court ought to take account of the Part 36 offer. He submits that a costs award which properly meets the justice of the case, whilst at the same time respecting the fact that the amount awarded exceeded Saint-Gobain's Part 36 offer, would be that Hammersmatch should pay 40% of Saint-Gobain's costs of the litigation.
He submits that when Hammersmatch served its first schedule of dilapidations on 23 December 2008 it claimed £7,676,476.50. That reduced by the time of Hammersmatch's pre-action letter on 11 January 2010 to £6,800,408.36 and then when proceedings were commenced on 2 June 2011 the Claim was for £4,418,500 plus continuing loss of rent and insurance rent at a combined annual rate of £752,498.40. He submits that Saint-Gobain had made a first Part 36 offer of £500,000 in November 2011 before it made the second Part 36 offer in the sum of £1,000,000 and that it was met much later and before trial by a Part 36 offer from Hammersmatch of £3,200,000. He submits that Saint-Gobain's Part 36 offers were rejected by Hammersmatch without making any attempts to negotiate and that the Part 36 offer made by Hammersmatch of £3,200,000 was quite unrealistic in the circumstances and reflected Hammersmatch's unreasonable and inflated view of the value of its claim which, he says, has characterised its approach throughout the dispute.
He submits that although the automatic cost rule under Part 36 does not apply, the reality is that Hammersmatch, by rejecting the Part 36 offer and pressing ahead without making any realistic counter offer,is no better off than it would have been if it had accepted that offer. He submits that carrying on the litigation after the Part 36 offer was wholly disproportionate and a waste of time and resources.
I now turn to consider those submissions.
Decision
I must first consider the appropriate way to treat the Part 36 offer which was made by Saint-Gobain in the sum of £1,000,000.
In Multiplex Construction (UK) v Cleveland Bridge UK [2008] EWHC 2280 (TCC) Jackson J, as he then was, reviewed a number of authorities and derived eight principles including the following at [72]:
" (vi) In considering the circumstances of the case the judge will have regard not only to any part 36 offers made but also to each party's approach to negotiations (insofar as admissible) and general conduct of the litigation.
(vii) If (a) one party makes an offer under part 36 or an admissible offer within rule 44.3(4)(c) which is nearly but not quite sufficient, and (b) the other party rejects that offer outright without...
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