Leighton Denny v Kambiz Babaee
| Jurisdiction | England & Wales |
| Judge | Pearce |
| Judgment Date | 19 June 2023 |
| Neutral Citation | [2023] EWHC 1490 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | HT-2020-MAN-000048 |
[2023] EWHC 1490 (TCC)
His Honour Judge Pearce
HT-2020-MAN-000048
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Manchester Civil Justice Centre
1 Bridge Street West
Manchester
M60 9DJ
This judgment was handed down remotely at 9.30 am on Monday 19 June 2023 by circulation to the parties or their representatives by email and by release to the National Archives
INTRODUCTION
This is my judgment on the Claimant's application for some or all of its costs of the action to be assessed on the indemnity basis; and for consideration of the Defendants' argument that the Claimant's costs should be reduced to have regard to the fact that the valuation of his claim changed during the course of the proceedings.
The claim arises from the purchase by the Claimant of a house at 91 Wellesley Road, Chiswick. The house, a new property, was sold by the First Defendant. The Claimant contended that there was significant defect causing dampness and affecting the property's fitness for habitation. He brought the claim against the First Defendant as vendors and developer of the property; against the Second Defendant as the building contractor who designed and built the property for and on behalf of the First Defendant; and against the Third Defendant (in the alternative) as a developer. In the event, the claim was not pursued against the Second Defendant. Since the Second Defendant therefore drops out of the picture and is of no relevance to this judgment, I use the term “Defendants” herein to mean the First and Third Defendants only.
The Claimant's claims against the First Defendant were in breach of contract and under the Defective Premises Act 1972; and against the Third Defendant, under the 1972 Act. The Claimant obtained default judgment against both Defendants on the claim under statute and elected not to proceed with the claim against the First Defendant in breach of contract.
Accordingly, when the matter came before me for trial on 18 April 2023, the only issues were as to causation and quantum. Prior to that hearing, the First Defendant sought an adjournment to give him an opportunity to obtain legal representation. I refused that application for reasons given at the time and the trial proceeded with the First and Third Defendants as Litigants in Person.
Following that trial, I ordered as follows:
5.1. Judgment was entered for the Claimant against the First and Third Defendant in the sum of £549,773.90 inclusive of VAT;
5.2. The Claimant was ordered to be paid his costs of the proceedings by the First and Third Defendant and to be paid the sum of £180,000 on account of his costs of the proceedings;
5.3. No Order for Costs was made as regards the costs reserved by paragraph 10 of the Court's Order of 14th October 2022;
5.4. The sums ordered under paragraphs 1 and 2 above were required to be paid by the First and the Third Defendant and received by the Claimant's solicitor by 5pm on 3rd May 2023;
5.5. The issues of whether the Claimant is entitled to indemnity costs and whether the Claimant's costs should be reduced to have regard to the fact that the valuation of his claim changed during the course of the proceedings to be heard by me at 10.00am on 15th June 2023;
5.6. Permission was given to both parties to lodge and exchange evidence in respect of the issues identified in the previous paragraph by 5pm on 17th May 2023.
5.7. Permission to Appeal was refused.
I understand that, as of the time of handing down this judgment, no Appellant's Notice has been filed.
Though the trial had been listed for four days I heard all evidence and gave judgment within two days. Towards the conclusion of submissions on indicated that his client was seeking indemnity costs. The First Defendant, Mr Babaee, resisted that application and contended that the Claimant's costs should be reduced to reflect a change in valuation of the claim during the proceedings.
Given that it was late in the day and that Mr Babaee told me that the proper preparation to deal with these issues required longer than the time available if I adjourned the issue to the following day, I determined that the outstanding issues should be considered at a hearing on 15 June 2023, as recorded above. I directed the filing of evidence at paragraph 5.6 above. There was no direction for the provision of skeleton arguments, but had any party wish to rely upon one, service would have been required in accordance with paragraph 6.5.5 of the Technology and Construction Court Guide by 4pm on 13 June 2023.
The Claimant filed written submissions in accordance with my directions but the Defendants failed to do so. Further, they did not file a skeleton argument. It therefore appeared that they were not intending to engage in the process. That lack of engagement is of a piece with the earlier conduct of the Defendants in this litigation as noted below.
The Claimant sought an order vacated the hearing on 15 June 2023 on the basis that the issues could be determined on paper. I acceded to this application and hence deliver this judgment on the basis of the written submissions are to be filed.
It is convenient to deal with the Defendants argument Claimant's costs should be reduced to reflect the change in its valuation the claim first, since, if there is any merit in this argument, it might bear on the application for indemnity costs sought by the Claimant.
THE RELEVANT LAW
The Court has a very broad discretion in respect of costs. The Civil Procedure Rule provide:
“ 44.2—Court's discretion as to costs
(1) The court has discretion as to—
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs—
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
…
(4) In deciding what order (if any) to make about costs, the court will 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.
(5) The conduct of the parties includes—
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction—Pre-Action Conduct or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.
(6) The orders which the court may make under this rule include an order that a party must pay—
(a) a proportion of another party's costs;
(b) a stated amount in respect of another party's costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings; and
(g) interest on costs from or until a certain date, including a date before judgment.
(7) Before the court considers making an order under paragraph (6)(f), it will consider whether it is practicable to make an order under paragraph (6)(a) or (c) instead.”
The Defendant's oral argument at the end of the trial that the Claimant's costs should be reduced to reflect the fact that the claim was originally based on a valuation that was subsequently significantly reduced suggest an argument based on exaggeration of the claim (a specific factor referred to at CPR 44.23(d). In Widlake v BAA Ltd [2009] EWCA Civ 1256, the Court of Appeal considered exaggeration in the context of a personal injury claim setting out certain general principles that are likely to be of relevance when the court is considering such an argument. As the authors of the White Book put it at paragraph 44.2.23:
“The Court explained that
(1) the manner in which the court is to “have regard” to conduct of the variety referred to in paras (b) and (d) of r.44.2(5) is principally to enquire into its causative effect, in particular, to the extent to which the conduct caused the incurring or wasting of costs;
(2)...
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