Claims for reduction of a party’s costs for inflated claims or that such costs should be paid on an indemnity basis require evidence to warrant such awards.
In Denny v Babaee and others [2023] EWHC 1490 (TCC), the Technology and Construction Court has considered the appropriate cost orders in connection with a dispute over a new build property in Chiswick.
The claimant purchaser contended that there was a significant defect causing damp and affecting the property’s fitness for habitation. He obtained default judgment against both the first defendant, vendor, and the third defendant, developer, under the Defective Premises Act 1972. The only issues before the judge were as to causation and quantum. The claimant was awarded damages of £550,000 and his costs of the proceedings.
The court has a broad discretion as to an award of costs, the amount of them and when they are to be paid under CPR 44 and in determining an award must have regard to all the circumstances including the conduct of the parties, whether a party has succeeded even if it has not been wholly successful and any admissible offer in the proceedings.
The defendants argued that the claimant’s costs should be reduced to reflect the fact that the claim was based on a valuation of over £721K, and subsequently reduced to £484.5K on which the judge based his award. However, the defendants had not filed submissions on the issue so it was unclear if they were arguing that the claimant should be penalised for relying on higher figures initially which were not relied upon at trial or that the initial figure was exaggerated. In the absence of submissions, the judge had no grounds for acceding to either argument.
The claimant argued that the defendants’ conduct justified an order for indemnity costs. The defendants had been uncooperative in the litigation having failed to respond to correspondence, to engage and/or deal with the case in a realistic matter which had incurred additional costs. While these were legitimate criticisms they were features of the rough and tumble of litigation and interlocutory costs orders had been made against them.
The claimant also argued that an agreement in principle had been reached at mediation whereby the defendants would purchase the property at a price to be determined by independent valuation and pay damages. A valuation of £1.3M was subsequently obtained but the defendants failed to purchase the property. The claimant was entitled to indemnity costs from when the purchase should have been completed.
Louise Clark is a property law consultant and mediator
