Wates Construction Ltd v HGP Greentree Allchurch Evans Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 10 October 2005 |
| Neutral Citation | [2005] EWHC 2174 (TCC) |
| Docket Number | HT-03–392 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 10 October 2005 |
[2005] EWHC 2174 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Court 10 St. Dunstan's House
London EC4
His Honour Judge Peter Coulson Q.C.
HT-03–392
MR. ANDREW NICOL (instructed by Plexus Law) appeared for the Part 20 Claimant
MS JOANNE SMITH (instructed by Squire & Co) appeared for the Part 20 Defendant
APPROVED JUDGMENT
Introduction
(1) On the morning of Sunday, 26 May 2002, the roof of a large retail unit in Salisbury collapsed, causing considerable damage. The unit was owned by Waitrose Limited and leased to Powerhouse Limited, a company selling electrical goods. It is agreed that the collapse was due to the build up of rainwater on the roof.
(2) The unit had been built for Waitrose, in 1997, by Wates Construction Limited. The work had been carried out pursuant to a design and build contract: in other words, Wates had a contractual liability to Waitrose in respect of both the design of the unit, and its subsequent construction in accordance with that design.
(3) Wates engaged various professionals to carry out design work on their behalf. HGP Greentree Allchurch Evans Limited, ("HGP"), were engaged as their architects, and they designed the drainage for the flat roof of the unit that collapsed.
(4) On 11 November 2003, Waitrose commenced proceedings against Wates for damages for breach of the design and build contract. The particulars of the breaches relied on by Waitrose were set out in paragraph 6 of the Particulars of Claim. They were, broadly speaking, formulated as allegations of negligent design of the drainage system for the flat roof. The claims made included the cost of repair, assessed at £550,000, various loss of profit claims and an indemnity in respect of any claims from Powerhouse.
(5) Wates denied the claim. Notwithstanding that, on 4 June 2004, they issued Part 20 proceedings against HGP. The Part 20 proceedings have continued until today, the first day of the trial. This morning, Mr Nicol, who appeared for Wates, informed me that Wates were discontinuing the claim against HGP. In accordance with CPR 38.6, Mr Nicol very properly accepted that Wates must pay HGP's costs. As to the basis for the assessment of those costs, Mr Nichol submitted that such costs should be assessed on a standard basis.
(6) Therein lies the remaining dispute between the parties which I must now resolve. The primary submission of Miss Smith, who appeared for HGP, was that I should order all of HGP's costs to be assessed on an indemnity basis. Her secondary submission, if I was against her first, was that, on any view, the costs after 10 August 2005 should be assessed on an indemnity basis, even if the costs before that date fell to be assessed on the standard basis. Behind both submissions lay a detailed attack on the way in which Wates and/or their solicitors, Plexus Law, had conducted the Part 20 litigation from its commencement.
Principles
(7) The conduct of litigation may, in certain circumstances, justify an award of indemnity costs. The leading recent authorities on this point are Reid Minty v Taylor 2002 1 WLR 2800 and Kiam v MGN Limited No 2 2002, 1 WLR 2810. In Reid Minty, Lord Justice May said, at paragraphs 28 and 32:
"If costs are awarded on an indemnity basis in many cases there will be some implicit expression of disapproval of the way in which the litigation has been conducted, but I do not think that this will necessarily be so in every case. What is, however, relevant, at the present appeal, is that litigation can readily be conducted in a way which is unreasonable and which justifies an award of costs on an indemnity basis, where the conduct could not properly be regarded as lacking moral probity, or deserving moral condemnation…
There will be many cases in which, although the defendant asserts a strong case throughout and eventually wins, the Court will not regard the claimant's conduct of the litigation as unreasonable and will not be persuaded to award the defendant indemnity costs. There may be others where the conduct of a losing claimant will be regarded, in all the circumstances, as meriting an order in favour of the defendant of indemnity costs. Offers to settle and their terms will be relevant, and if they come within Part 36 may, subject to the Court's discretion, be determinative."
(8) In Kiam v MGN No 2 Lord Justice Simon Brown explained that reasoning in this way:
"I for my part understand the Court there [in Reid Minty] to have been deciding no more than that conduct, albeit falling short of misconduct deserving a moral condemnation, can be so unreasonable as to justify an order for indemnity costs. With that I respectfully agree. To my mind, 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. An indemnity costs order made under Part 44, unlike one made under Part 36, does, I think, carry at least some stigma. It is, of its nature, penal rather than exhortatory."
(9) Another relevant decision, relied on by Mr Nicol, was the judgment of Mr Justice Rattee in Atlantic Bar & Grill Ltd v Posthouse Hotels [2000] CP Reports 32. That was a case in which the third defendant successfully sought an order that the costs of the claim for an injunction against him, once it was discontinued on the second day of trial, should be assessed on an indemnity basis. Mr Justice Rattee said:
"I should say that one of the striking features of this case, having regard to the claim for an injunction which has been made throughout by the claimant against the third defendant, is that at no stage was any attempt made to obtain from the Court any interim injunction. The result of that, of course, has been inevitably that by the time the trial of this action started at the beginning of this week the defendant's business had been up and running for nearly a year, certainly nearly 11 months, and Mr Dowding, on behalf of the claimant, realistically accepted that, as a result, any claim he might otherwise have had for an injunction was seriously undermined, given that there had been no attempt by his client, in the meantime, to seek interim injunctive relief from the Court.
I do not find this an easy question but, on balance, I think the claimant should have to pay the third defendant's costs on an indemnity basis. I am concerned by the way in which this litigation has been conducted on the part of the claimant against the third defendant, culminating in the notice of discontinuance today."
(10) Sadly, despite the CPR, there are plenty of cases which are run in a way that, certainly with hindsight, could be described as "unfortunate", or worse. Further, there are many claims which are discontinued and, although it is unusual for a claim to be discontinued on the first day of trial, the mere fact that discontinuance occurred so late does not, of itself, mean that an order for indemnity costs is...
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