Ms Basia Lejonvarn v Mr Peter Burgess & Mrs Lynn Burgess
| Jurisdiction | England & Wales |
| Judge | Lord Justice Coulson,Lady Justice Rose,Sir Jack Beatson |
| Judgment Date | 06 February 2020 |
| Neutral Citation | [2020] EWCA Civ 114 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2019/0502 |
| Date | 06 February 2020 |
[2020] EWCA Civ 114
Lord Justice Coulson
Lady Justice Rose
and
Sir Jack Beatson
Case No: A1/2019/0502
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE TECHNOLOGY AND CONSTRUCTION COURT
Mr Recorder Bowdery QC (Sitting as a Deputy High Court Judge)
Royal Courts of Justice
Strand, London, WC2A 2LL
Louis Flannery QC & Rupert Cohen (respectively of and instructed by Stephenson Harwood LLP) for the Appellant
Seb Oram (instructed by Mayo Wynne Baxter LLP) for the Respondents
Hearing date: 16th January 2020
Approved Judgment
INTRODUCTION
There was a time, 30 or 40 years ago, when construction litigation was a byword for expense and delay, and where the costs were often out of all proportion to the sums at stake. Subsequently, thanks in part to compulsory construction adjudication, which has reduced the number of construction cases that go through to a final trial, and the careful case management by TCC judges of those cases which do, construction litigation has become a much more efficient and cost-effective method of dispute resolution. But occasionally, circumstances conspire to create a construction case with echoes of the bad old days. Unfortunately, this is one such case.
The appellant is an American-qualified architect, who was a friend and former neighbour of the respondents. Gratuitously, she provided assistance to the respondents when they wanted to undertake major landscaping works (including structural elements) in their North London garden (“the garden project”). There was a falling-out which led the respondents to commence proceedings against the appellant in the TCC for breach of contract and/or negligence. The appellant made a Part 36 offer in the sum of £25,000 three weeks after the start of proceedings, which was not accepted.
Following the trial of Preliminary Issues, the existence of any contract was rejected. Although it was found that the appellant owed the respondents a duty of care (a finding subsequently upheld by the Court of Appeal), this court made plain that, in these particular circumstances, the duty of care related to only such professional services as the appellant in fact provided; in other words, she could have no liability in respect of any alleged omissions. That meant that what the appellant actually did was critical to any claim in negligence against her. Following numerous further interlocutory skirmishes and a 5-day trial, the judge concluded that the appellant had in fact provided very few services and had not been negligent in providing any of them. The claim failed in its entirety.
The appellant's costs were presented to the judge in the eye-watering amount of £724,265 (and even that was incomplete, because it excluded some items such as the costs of the earlier appeal). She sought assessment on an indemnity basis. The respondents argued, and the judge agreed, that costs should be assessed on the standard basis. The appellants' appeal against that decision on costs, together with the respondents' notice, raised three distinct issues:
a) Whether this was a case in which the respondents' pursuit of what were said to be “speculative, weak, opportunistic or thin claims” could properly be described as out of the norm such as to warrant an order for indemnity costs.
b) Whether the respondents' failures to accept and subsequently to beat the appellant's Part 36 offer, made at a very early stage in the proceedings, also meant (either separately or taken cumulatively with the pursuit of these particular claims) that an order for indemnity costs was warranted.
c) The relevance, if any, of the fact that the appellant's approved costs budget was said to be £415,000, but that any assessment on the indemnity basis would start at the appellant's actual costs figure of not less than £724, 265.
THE FACTUAL BACKGROUND
The factual background to this case has already been set out in detail on three separate occasions: by Mr Alexander Nissen QC (sitting as a Deputy High Court Judge) in his ruling on the Preliminary Issue ( [2016] EWHC 40 (TCC)); by the Court of Appeal in their judgment upholding his decision but modifying the duty of care to reflect what the appellant actually did, rather than what it was alleged she omitted to do ( [2017] EWCA Civ 254); and in the substantive judgment of Mr Martin Bowdery QC (sitting as a Deputy High Court Judge) (“the judge”) on the substantive issues at [2018] EWHC 3166 (TCC). It is therefore unnecessary to set the background out all over again in this judgment. I identify below only those matters by way of factual background which appear to be relevant to the appeal on costs.
In 2013, the respondents were considering the garden project and obtained a quotation of £155,837, plus a planting budget of £19,785 (both exclusive of VAT) from Mark Enright of the Landscape Garden Company Limited. The respondents did not immediately proceed with this quotation because of their concerns about the costs. Following some casual conversations with the appellant, she became involved in the garden project between March and July 2013. In April 2013 (contrary to the evidence of the first respondent) Mr Nissen QC subsequently found that a budget figure of £130,000 was discussed between the appellant and the first respondent.
Over the next few weeks, a considerable amount of piling and other groundworks was carried out at the site. By early July the first respondent had become concerned about the budget. At a meeting on 8 July, he said that he had understood that the budget was £78,000, not £130,000. He denied that he had ever agreed the £130,000. In consequence of this, on 9 July 2013, the appellant terminated her relationship with the respondents. At no stage did she make any claim for fees in connection with the garden project.
The respondents did not comply with the TCC pre-action protocol, but commenced proceedings, alleging breaches of contract and a duty of care at common law, on 5 March 2015. The claim was for approximately £300,000, most of which was a global claim (explained below). On 26 March 2015, the appellant made an offer in accordance with CPR Part 36 to settle the case for £25,000. This offer was not accepted either within 21 days, or at all. Instead, on 31 March 2015, the respondents made a counteroffer in the sum of £220,000.
The claim was unusual because of the nature of the relationship between the parties, and the fact that such services as were provided by the appellant were provided free of charge. It appears that, at the first CMC, Edwards-Stuart J was sceptical about the legal basis of the claims, and he ordered Preliminary Issues to address the existence of the alleged contract and the alleged duty of care. As noted above, Mr Nissen QC decided those Preliminary Issues in a judgment dated 15 January 2016. Although he found the existence of a duty of care in tort, the respondents lost their case that there was a contract, and also suffered a major reverse on the arguments about the budget advice. Thereafter, on 5 February 2016, the respondents made a Part 36 offer in the sum of £150,000, which was £70,000 less than their offer the previous March.
On 16 March 2016, the appellant was granted permission to appeal, and the TCC proceedings were stayed. The Court of Appeal judgment, referred to above, was dated 7 April 2017. In it, the Court of Appeal upheld the finding of a duty of care although Hamblen LJ (as he then was) was concerned to stress its limitations:
“88. It is important to stress that this is not a duty to provide such services. It is a duty to exercise reasonable skill and care in providing the professional services which Mrs Lejonvarn did in fact provide in relation to the Garden Project. She did not have to provide any such services, but to the extent that she did so she owed a duty to exercise reasonable skill and care in the provision of those services.”
Thereafter, there were an extraordinary number of further interlocutory applications and hearings. Most, but not all, of these were generated by the respondents. In particular, it took them two attempts (September and December 2017) to amend their Particulars of Claim in the light of the Court of Appeal judgment. In important respects, their new case was diametrically opposed to their original case: for example, having originally denied that they were given a budget figure as high as £130,000, the respondents were now obliged to argue that this figure was much too low.
In its final form, the shape of the pleaded claim was as follows. Section F(2) of the Amended Particulars of Claim was concerned with alleged failures in respect of inspection and supervision. These allegations were made by reference to a Scott Schedule. It was axiomatic that these defects, and other alleged “non-conformances” with the Enright design, were (or ought to have been) apparent to the appellant by 9 July 2013 (which was when she ceased her relationship with the respondents). Section F(3) set out particulars of negligence in relation to the few design drawings provided by the appellant. Section F(4) comprised allegations of failure in respect of budgeting and cost control.
The Particulars of Loss at paragraph 33 set out the respondents’ primary claim, which was for every penny that the respondents had spent over and above the Enright quotation. This has been referred to subsequently as ‘the global claim’. As amended, it amounted to £172,224.53. The global claim had always been part of the original Particulars of Claim (albeit in a different sum) but, when giving permission for the amendments to it, O'Farrell J was unimpressed enough to remark that the global claim “should come with a government health warning”. Paragraph 33(2) of...
To continue reading
Request your trial
-
Essex County Council v UBB Waste (Essex) Ltd
...example of such conduct. Coulson J awarded indemnity costs on this basis in Wates. More recently, as Coulson LJ in Burgess v Lejonvarn [2020] EWCA Civ 114, [2020] 4 W.L.R. 43, he clarified at [45] that, in his statement of this principle in Elvanite, he used “hopeless” as shorthand for th......
-
The Queen (on the Application of Bushra Parveen) v London Borough of Redbridge
...framework 23 This court has only very recently reiterated the approach to be taken in appeals about costs. In Lejonvarn v Burgess [2020] EWCA Civ 114 Coulson LJ said: “49. I deal with each of those issues in turn below. I do so against the background of the test to be applied to appeals co......
-
Carmela De Sena v Joseph Notaro
...issue was ultimately resolved. 12 I was also referred to the more recent decision of the Court of Appeal in Lejonvarn v Burgess [2020] 4 WLR 43. This was a claim brought by Mr and Mrs B against their neighbour and former friend L in respect of a landscaping project in Mr and Mrs B's garden......
-
Blackpool Borough Council v Volkerfitzpatrick Ltd
...the making of an indemnity order”. 20 However, as Mr Hale submits, the recent decision of the Court of Appeal in Burgess v Lejonvarn [2020] EWCA Civ 114 gives useful further guidance on the general principles which are applicable in cases where a defendant does better than his Part 36 offe......
-
Court Of Appeal Decision Highlights Indemnity Costs Risk Where Claimant Pursues Speculative Claims And Unreasonably Refuses Part 36 Offer
...should have known their claims were speculative/weak and where the defendant had made an early Part 36 offer: Lejonvarn v Burgess [2020] EWCA Civ 114. The present case acts as a warning to claimants who pursue claims which they should have appreciated were weak or speculative. When such a c......