Defective premises – Award of damages – Costs – Claimant home owners suing developer and National House Building Council and NHBC Building Control Services in relation to defective premises – Court awarding damages as result of negligent design and construction of piling – Court being asked to determine appropriate order for costs in relation to the claims against NHBC parties – Whether claimants or defendants liable for those costs – Determination made
The claimant owners of properties in Hartlepool brought proceedings in relation to defects in foundations on an estate of 94 new detached houses designed as high–quality executive homes. The court held that the first defendant developer was liable to the claimants in contract, under the Defective Premises Act 1972 and also under section 2 of the NHBC Buildmark Policy which applied to each of the properties: see [2011] EWHC 1811 (TCC). The court then held that the first defendant should pay the claimants 95% of their costs of dealing with those foundation claims against the first defendant. The parties were able to reach a settlement on the claims for foundation defects and also the costs related to those claims.
When the claimants issued proceedings against the first defendant, they also joined the National House Building Council and the NHBC Building Control Services (the second and third defendants). The claims against the second and third defendants were stayed to allow compliance with the Pre-Action Protocol for Construction and Engineering disputes. The second defendant applied to strike out the claims made against it or for summary judgment dismissing those claims. Directions were given lifting the stay as against the second defendant. The claimants informed the second defendant that they were no longer pursuing claims against it based on a common law duty of care or under the Defective Premises Act 1972. However they maintained the remaining claims under section 3 of the Buildmark Policy.
The court then ordered that the claims for breach of a common law duty of care and under the 1972 Act be struck out with costs reserved. However, the court dismissed the second defendant’s application to strike out the claims under section 3 of the Buildmark Policy and dismissed its application to strike out/for summary judgment, reserving all questions of costs. The stay of the proceedings between the claimants and second defendant was then continued and remained in place as had the stay against the third defendant.
The court was subsequently asked to deal with the costs relating to the proceedings against the second and third defendant. In particular the issue was whether those costs should be borne by the claimants, the first defendant or the second and third defendants.
Held: The court made the determination sought.
(1) In multi-party cases the exercise of the discretion involved consideration of whether orders should be made for one defendant to pay the costs relating to proceedings against another party. As set out by the Court of Appeal in Sanderson v Blyth Theatre Company [1903] 2 KB 533 and in Bullock v The London General Omnibus Company [1907] 1 KB 264, where a party sued two or more defendants and succeeded against one but failed against one or more other defendants, the court had a discretion to order the unsuccessful defendant to pay the costs of the claimant in pursuing the successful defendant and the costs of the successful defendant. Whether the unsuccessful defendant was ordered to pay the costs of the successful defendant directly, as in a Sanderson Order, or by payment to the claimant as in a Bullock Order was a question for the court’s discretion.
The present case was not a classic case for the imposition of a Bullock or Sanderson Order. Whilst the first defendant was an unsuccessful defendant there had been no determination of liability on the part of the second and third defendants so as to be able to describe them, on the usual basis, as a successful or unsuccessful defendant. However the discretion to order costs under CPR 44.2 clearly included a discretion to order an unsuccessful defendant to pay costs relating to a co-defendant. That was generally on the basis that the claimant was liable for those costs and so an order for costs in favour of the claimant would include those costs. The analysis of whether the second and third defendants had been successful or unsuccessful was normally decided when liability had been determined. In this case there had been no determination.
(2) There did not always have to be a determination of liability and the court would sometimes be called upon to determine liability for costs when the parties had settled proceedings: see the cases cited in Vector Investments v William [2010] BLR 195. In this case, all that had happened was that the proceedings between the claimants and the second and third defendants had been stayed, those parties had undertaken a pre-action protocol process and there had been an unsuccessful application by the second defendant to strike out the proceedings or for summary judgment. The parties had not developed their cases in pleadings and there had been no disclosure or witness statements or expert reports. On that basis, the court was clearly unable to make an assessment of liability.
(3) In all the circumstances, the appropriate order as between the claimants and the second and third defendants was that there should be no order as to costs which did justice between those parties where, in effect, all that had happened, apart from the strike out/summary judgment application was that the parties had complied with the pre-action protocol. The same order should apply between the second and third defendants. There had been joint representation and no case had been articulated to differentiate between those parties in relation to the appropriate order for costs in relation to the proceedings. However, the second defendant should pay the costs of its application to strike out the claim and/or for summary judgment against the claimants.
(4) As between the claimants and the first defendant, the first defendant should pay the claimants’ costs of the claims for foundation defects against the second defendant save in relation to the claims which were subsequently abandoned. It had been unreasonable for the claimants to make those claims which were wholly independent of claims under the Buildmark Policy. There was also a basis for distinguishing between the costs of the second and third defendants in relation to the first defendant. Whilst the possibility that the first defendant might seek some remedy against the third defendant had been mentioned, it was for the claimants to take their own independent view of the claim against the third defendant. The court was not persuaded that the first defendant’s liability to pay costs to the claimants should include any costs which the claimants had expended in relation to the third defendant in that respect.
(5) The proceedings between the claimants and the second and third defendants would be stayed until further order.
Andrew Bartlett QC and Robert Stokell (instructed by Tilly Bailey & Irvine LLP, of Hartlepool) appeared for the claimants; Anneliese Day QC (instructed by Weightmans LLP) appeared for the first defendant; Sarah Hannaford QC (instructed by Pinsent Masons LLP) appeared for the second and third defendants.
Eileen O’Grady, barrister
