Peter Kellie and Another v Wheatley & Lloyd Architects Ltd
| Jurisdiction | England & Wales |
| Judge | H.H. Judge Keyser |
| Judgment Date | 27 August 2014 |
| Neutral Citation | [2014] EWHC 2886 (TCC) |
| Docket Number | Claim No: 0BS90655 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 27 August 2014 |
[2014] EWHC 2886 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CARDIFF DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
Cardiff Civil Justice Centre
2 Park Street
Cardiff, CF10 1ET
His Honour Judge Keyser QC
sitting as a Judge of the High Court
Claim No: 0BS90655
Alex Troup (instructed by Foot Anstey LLP) for the Claimants
Marc Lixenberg (instructed by Beale and Co Solicitors LLP) for the Defendant
Hearing date: 11 August 2014
H.H. Judge Keyser Q.C.:
On 3 July 2014 I gave judgment dismissing the claim of the claimants, Mr and Mrs Kellie, for damages for professional negligence against the defendant, Wheatley & Lloyd Architects Limited. For reasons set out at length in the judgment, [2014] EWHC 2212 (TCC), I held that the claimants had not established that the defendant had breached the duty of care that it owed to them. I also explained why, if I had reached a different conclusion on breach of duty, I would have held that the claimants had failed to establish that they had suffered any loss as a result.
At a hearing on 11 August 2014 Mr Lixenberg for the defendant and Mr Troup for the claimants made detailed submissions concerning the orders in respect of costs that ought to be made in consequence of my judgment. As the claimants conceded that they must pay at least 90% of the assessed costs of the defendant, at the end of the hearing I ordered that they pay £70,000 on account of costs within twenty-eight days. I also made an order for the payment of interest on the costs, both before and after judgment. However, I reserved three issues for further consideration.
1) Whether the claimants should pay more than 90% of the defendant's assessed costs;
2) Whether the assessment of the defendant's costs should be on the indemnity basis;
3) Whether, in the light of my decision on the first two issues, the claimants should pay any further amount by way of interim payment.
This is my judgment on the reserved issues.
The extent of the costs liability
For the claimants, Mr Troup contended that the defendant should recover only 90% to 95% of its costs, on the ground that it raised, pursued to trial and lost on two discrete issues: (1) the no-loss defence [judgment, paras 103–4]; (2) the limitation defence [judgment, paras 105–110].
The power to make an order for only a proportion of the successful party's costs ("a proportionate costs order") is recognised in r. 44.2(6)(a). In deciding what order to make about costs, the court is required to have regard to all the circumstances, including those mentioned expressly in r. 44.2(4) and (5); the following provisions of those paragraphs are particularly relevant:
"(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 …
(5) The conduct of the parties includes –
…
(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 … a particular allegation or issue; …"
In Multiplex Construction (UK) Ltd v Cleveland Bridge UK Ltd [2008] EWHC 2280 (TCC), at [72], Jackson J derived a number of principles from the authorities; Mr Troup relied on the following principles in particular:
"(v) In many cases the judge can and should reflect the relative success of the parties on different issues by making a proportionate costs order.
(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.
…
(viii) In assessing a proportionate costs order the judge should consider what costs are referable to each issue and what costs are common to several issues. It will often be reasonable for the overall winner to recover not only the costs specific to the issues which he has won but also the common costs."
In Enterprise Managed Services Ltd v Tony McFadden Utilities Ltd [2010] EWHC 1506 (TCC), Akenhead J said at [10]:
"A number of general observations can properly be made in the context of this case in relation to the fixing of the relevant percentage in the proportionate costs approach:
(a) The first step is obviously to determine which of the parties has been successful in overall terms; if one can not determine that, it may be that one needs to consider the issues-based approach.
(b) One needs to consider the overall context of the litigation, including the reasons which led to its genesis; that involves considering the conduct of the parties which led to the need for the litigation in the first place.
(c) The reasonableness, or unreasonableness, of each party taking the various points or issues upon which it lost, should be considered by the Court. The more unreasonable the position of the losing party, the more likely that, even if the court orders only standard, as opposed to indemnity, based costs, it will attach weight to this factor.
(d) Whilst one needs to have regard to the issues upon which each party has succeeded, a simple mathematical approach on the basis of the number of issues 'won' by each party will often not be an appropriate basis for fixing the percentage; thus, simply because the overall successful party has won 3 out of 5 issues, should not mean automatically that it should recover 60% of its costs. One needs to have regard to the likely amount of resources applied as well as to the impact overall of the success or failure on the various issues.
(e) Similarly, the Court should be cautious about fixing a proportion by reference to the amount of time or space applied by the judge in his or her judgement to the issues upon which each party has been successful or unsuccessful. The judge may simply have had to take up more time and space in the written judgement to address what may be more complex issues. The fact that 80% of the judgement addresses a legal issue upon which the overall successful party lost should not, at least generally, mean that it can only recover 20% of its costs.
(f) The Court needs also to have regard to the fact that the overall unsuccessful party will have incurred cost in dealing with the issues upon which it has 'won'.
(g) Where the parties have put before the court summary costs bills for assessment, the Court can have regard to the likely cost and resource which each party will have applied in relation to the issues upon which they have won or lost.
(h) Where the parties cannot put such information before the Court, and in any event, the Court must do the best that it can in fixing a proportion."
Mr Troup submitted that the no-loss defence and the limitation defence were discrete and freestanding points; neither of them was simply a way of putting a point that succeeded by virtue of a different line of reasoning. He accepted that, although time at trial was taken in submissions on the two defences, they did not have the effect of materially lengthening the trial; the number of days was not increased, and it cannot even be said that the time taken on any one day was significantly increased because of the need to address the points. However, he submitted that the points had caused additional work to be undertaken, both because he had needed to deal with the legal arguments and because, as H.H. Judge Havelock-Allan QC had observed at the pre-trial review, it was necessary to examine closely the facts and evidence concerning events six years before the issue of the proceedings. The two defences failed for reasons that ought to have been apparent and well understood considerably in advance of the trial, yet they were pursued and never abandoned, even though Mr Lixenberg did not make any oral submissions in support of them. Mr Troup submitted that the defendant had unreasonably failed to be selective in the points it had taken; he referred to the observations of Ramsey J in BSkyB Ltd v HP Enterprise Services UK Ltd [2010] EWHC 862 (TCC), at [13]:
"In my judgment a proportionate costs order may be appropriate to reflect the extent to which a successful party has not been selective in the points they have taken and so should not recover all of their costs. An example of this situation is a case where an issues based approach might otherwise be appropriate. It is clear that in such a case the Court should avoid ordering, for instance, that each party should have the costs of certain issues, but if practicable should make a proportionate costs order or, alternatively, one which gives one party the costs from or until a particular date."
Mr Lixenberg submits, to the contrary, that these are not truly discrete issues; they are merely arguments on the issues "no loss" and "no liability" and should be seen as such, in accordance with the judgment of Coulson J in J Murphy & Sons Ltd v Johnston Precast Ltd (No. 2—Costs) [2008] EWHC 3104 (TCC). He also submits that the issues did not materially lengthen the trial; they may have added a few minutes, but they did not take it into a further day or even a further session on a particular day. They did not increase Mr Lixenberg's fee for the trial and can hardly have done so for Mr Troup. They are properly de minimis.
I agree with Mr Lixenberg's submissions. It is probably futile to engage in a semantic discussion of whether the no-loss defence and the limitation defence were distinct issues or merely arguments on wider issues. Each of them gave rise to specific legal submissions. It is possible that they necessitated some further evidential enquiry, but I should think that, if they did, it was probably minimal. The...
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