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Costs

This page deals with two cases on costs
  • Compromise: Where parties had settled the substantive matter of a dispute, but left open the issue of costs, the court had a discretion as to whether it would determine who should pay costs and the amount.

  • Discontinuance: A person who discontinues a claim can avoid paying costs in appropriate cases where the pre-action behaviour of the defendant justifies it.

  • Part 36 - "near miss" offers

Compromise

Determination after settlement of substantive issues

Gossage v Bishton
[2012] EWCA Civ 717

Where parties had settled the substantive matter of a dispute, but left open the issue of costs, the court had a discretion as to whether it would determine who should pay costs and the amount. It should only make such a determination where it is clear who the successful party was. Where it was not clear, there should be no order as to costs.

Discontinuance

Where costs will not follow the usual rule

Nelson’s Yard Management Company v Eziefula
[2013] EWCA Civ 235

Summary

A person who discontinues a claim can avoid paying costs in appropriate cases where the pre-action behaviour of the defendant justifies it.

Facts

This matter arose out of works E carried out to his property which N, his neighbours, alleged were in breach of planning, required a Party Wall etc Act award and were causing damage to their foundations. E ignored pre litigation correspondence and refused access to N’s surveyor.

N then issued proceedings for an injunction and damages. E then permitted access at which point it became clear that the foundations were not being damaged. E filed a Defence setting out that his contractors had overstepped the mark when carrying out building works. N filed notice of discontinuance and sought costs on the basis of E’s obstructive behaviour.

First instance

The judge held that he could not depart from CPR Part 38.6(1). This provides that “unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant, against whom the claimant discontinues, incurred on or before the date on which notice of discontinuance was served on the defendant”. N appealed to the Court of Appeal.

Decision

The Court of Appeal allowed the appeal. Taking into account the behaviour of E, N should have their costs until the date the defence was served. To this extent they had satisfied the burden of showing that rule 38.6(1) should be disapplied. Thereafter, had N considered the defence to be spurious, they could have sought to have had it struck out or to seek summary judgment, which they failed to do. Therefore, there should be no order for costs after this date.


Part 36 Offers

"Near miss" offers

Hammersmatch Properties (Welwyn) Limited v Saint-Gobain Ceramics and Plastics Limited
[2013] EWHC 2227 (TCC)

Summary

The court considered the correct approach that should be taken where a party narrowly beats a part 36 offer.

Facts

C obtained damages for dilapidations of £900,000, plus £20,320.40 for schedules; which together with interest amounted to an award of £1,058,768. D had made a part 36 offer of £1,000,000. Taking into account interest on the offer, C beat the offer by £3,637.90 - as the Judge commented “a very small percentage of the sum offered”. (For the main case see the page on Damages and s18 cap in the Dilapidations section of the site.)

Issue

The key issue was whether this was “more advantageous” than the money judgment. 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.”
Decision

The High Court held that the changes to Part 36 had the effect of reversing the decision in Carver v BAA Plc [2008] EWCA Civ 412, so that this offer could not now be considered as “more advantageous”. Further, the narrow margin should not be relevant to considerations of costs under CPR 44.2(2) and whether to make a different order to the usual order that the successful party be awarded their costs. Finally, it was dangerous for the court to speculate as to what the parties might have done if one party had not unreasonably refused to negotiate.

On a separate point, D asserted that costs should be reduced because C had exaggerated their claim for damages. This was rejected. Although C did not achieve as much as it claimed, the judge did not consider that that had been a result of unreasonable conduct. The costs were reduced however due to C running a claim that they intended to carry out the works of repair when the Judge found that they had formed no such intention and that that issue had taken up a significant amount of time and expense.


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