Professional negligence – Surveyor – Damages – Claimants seeking damages for negligence – Claimants refusing to mediate – Claimants succeeding to limited extent and claiming costs – Defendant alleging unreasonable conduct in mediation – Whether court reflecting claimants’ conduct in order for costs – Claim allowed in part
The claimants brought an action for professional negligence against the defendant in connection with the leasing of car-parking land to Bournemouth International Airport (BIA). The judge found that negligence was established, although not to the extent alleged by the claimants: see [2007] EWHC 999 (QB); [2007] 21 EG 130 (CS).
He subsequently awarded damages totalling £915,139 assessed on the basis of loss of capital value. He also held that on a loss of income basis, the damages would have been £6,972,569. The sum claimed at trial on liability had been as high as £87.8m. The main reason why the claimants recovered much less was because the judge found that the income split should have been 10%; £87.8m was based upon 93.4%. A further significant factor was the judge’s holding that the proper measure of damage was the loss of capital value rather than the loss of income.
The claimants applied for their litigation costs, which were put at £1.84m. They submitted that, since they had won the case, they should receive their costs, subject possibly to an order to reflect the fact that they had lost on various discrete issues. The defendant argued that the claimants should not be treated as winners because they had been awarded only a small proportion of their claim. It relied upon the claimants’ exaggeration of their claim, which, the defendant said, had made mediation impossible. Accordingly, it contended that the claimants’ approach to mediation should be reflected in any order for costs. In all the circumstances, the court should make no order for costs.
Held: The claim was allowed in part.
The general principle, reinstated in CPR 44.2(a), was that costs should follow the event. Its application required the court to determine which was the successful and which the unsuccessful party. Although that principle still had a significant role, it was a starting point from which the court could depart to make orders reflecting the outcome on different issues. The court was required to have regard to, inter alia, the parties’ conduct, success on some parts of a case, payments into court and admissible offers to settle: see CPR 44.4. Conduct included conduct throughout, in particular the extent to which any preaction protocol was followed, the reasonableness of pursuing an action, the manner of pursuit and whether a claimant had exaggerated his claim: see CPR 44.5: AEI Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507 and Johnsey Estates (1990) Ltd v Secretary of State for the Environment, Transport and the Regions [2001] EWCA Civ 535; [2001] 2 EGLR 128 considered.
Where failure to mediate resulted fromthe attitudes taken on either side, it was not open to one party, here the defendant, to claim that the failure should be taken into account in the order on costs. However, a party that agreed to mediate but whose unreasonable position caused the mediation to fail, was in the same position as a party that unreasonably refused to mediate. It was something that the court could and should take into account in the costs order: Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 579; [2004] 1 WLR 3002 and Hickman v Blake Lapthorn (Costs) [2006] EWHC 12 (QB) applied.
In the present case, the claimants’ position at the mediation had been unrealistic and unreasonable. Had they made an offer taht better reflected their true position, the mediation might have succeeded.
The claimants’ costs on liability would be reduced by 15%, reflected their failure on discrete issues, and they would receive only 70% of the remainder because they had recovered so much less than the amount claimed. Their costs on quantum would be reduced by 15% because of they had failed on the basis of assessment, and they would receive only 80% of the remainder owing to their unreasonable attitude in the mediation. Finally, the claimants would pay 15% of the defendant’s costs on liability and quantum.
Anthony Speaight QC (instructed by Stockler Brunton) appeared for the claimants; Edwin Johnson QC and John Gallagher (instructed by Williams Holden Cooklin Gibbons LLP) appeared for the defendant.
Eileen O’Grady, barrister
