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Burchell v Bullard, Court of Appeal, 8 April 2005

27 May 2005
The issues

Costs – Counter Claim – Issued Based Orders – Mediation

The facts

The Claimant was a small builder. The Defendant and his wife were the owners of a property in Bournemouth. The Claimant agreed to build two large extensions to the property. The Claimant was to be provided at four staged intervals. In August 2000 the Claimant submitted his claim for the third stage payment which was never paid. Instead Mr and Mrs Bullard complained about the work and wrote setting out what they said had to be done before any further payments would be made. Each accused the other of refusing to honour the contract. The Claimant instructed solicitors.

They suggested that the matter be referred for alternative dispute resolution. The Defendant’s “sorry response” was that the matters were too technically complex for mediation. In February 2002 the Claimant brought a claim for £18,318.45. The Defendants counter claimed £100,815.34 together with further not fully particularised damages.

In May 2003 the Claimant brought a Part 20 Claim in response to the Defendant’s Counter Claim in relation to the roof which had been built by a sub contractor.

The matter came to Trial in March 2004 for 5 days. The Judge entered Judgment for the Claimant against the Defendant for £18,327.04 but gave Judgment for the Defendant against the Claimant on the Counter Claim for £14,373.15. Allowing for VAT and interest the Defendants were in the end ordered to pay the Claimant £5,025.63 being the difference between the two figures.

He ordered the Defendant to pay the Claimant’s costs of the claim and the Claimant to pay the Defendant’s costs of the Counter Claim (and ordered the Claimant also to pay the costs of the Part 20 Claim) notwithstanding that the Claimant succeeded but only for £79.50. The Claimant appealed arguing that the Judge should have awarded him his costs of the Counter Claim or at least his costs of the Counter Claim insofar as it related to the roof.

The decision

1. The Judge found in respect of the roof issue that the Claimant’s expert evidence was preferred to that of the Defendant. On this issue the Defendants recovered only about 17% of their Counter Claim. As to the remedial work issue in the Counter Claim he found that the Defendant succeeded to about 13%. As to a third very minor part of the Counter Claim, less than 1% was successfully recovered. The Defendant’s overall success rate was less than 15%.

2. “An horrific picture” emerged when the costs of the parties were considered. In a case where ultimately £5,000.00 would pass from Defendant to Claimant, the Claimant had spent about £65,000.00 up to the end of the Trial and the Defendant’s costs were estimate at about £70,000.00.

3. The situation was worsened in that when the matter was in the Court of Appeal the Respondent had refused the Claimant’s invitation to make use of the Court of Appeal Mediation Scheme.

4. The Judge had dismissed the modern tendency to consider the awards on an issue by issue basis because of the difficulty in the preparation of a Bill of Costs and the enormous complication of the process of Detailed Assessment. The Court of Appeal agreed. It was better to deal with the matter another way if possible. The Judge however did not find another way and resorted to costs following the event. This was wrong. He wrongly fettered his discretion in not considering what alternatives were available to him. The most obvious and frequently most desirable option was to order a proportion of the parties’ costs to be paid. It would be wrong to incur the waste of costs by sending the matter back to the Judge.

5. In this litigation the Claimant had hardly exaggerated his claim whereas the Defendant had most certainly exaggerated their Counter Claim.

6. The Defendants had conducted the litigation “more unreasonably” than the Claimant particularly with regard to its treatment of expert evidence.

7. Neither party had made any payment into Court or any admissible offer to settle.

8. The Defendant had refused to mediate at the very beginning of the action. Following the decision in Halsey and considering the factors to be looked at in order, there was no question that the matter was suitable and was the kind of dispute which lent itself to ADR; secondly that in respect of the liability arguments there was clearly room for give and take. Thirdly that the costs of ADR would have been “a drop in the ocean” compared with the “fortune that has been spent on litigation”. The Defendants could not rely on their own obstinacy to assert that mediation had no reasonable prospect of success. The Halsey factors were therefore established and they ordinarily the Court would mark its disapproval by imposing some of the Defendant’s refusal by imposing a costs sanction. However at the time that the offer to mediate had been made the law was not as clear and developed as it now was. The reasonableness of Defendant’s conduct had to be judged against the background of practice a year prior to the decision in Dunnett.

9. However the legal profession should take no comfort from this conclusion. The Court had given its stamp of approval to mediation and the legal profession had to become aware of it and acknowledge its value. It could no longer with impunity shrug aside reasonable requests to mediate. Whilst these Defendants had escaped the imposition of a costs sanction Defendants in a like position in the future could expect little sympathy if they battled on blithely regardless of the alternatives.

The appeal would be allowed in respect of the costs of the claim and counter claim and also in respect of the costs of the Part 20 Proceedings. The Judge’s orders would be set aside. The Defendants would pay 60% of the Claimant’s costs of the claim, counter claim and Part 20 proceedings and 60% of the Claimant’s liability to pay the Part 20 Defendant’s costs.

Comments

Lord Justice Rix added his own comments to those of Lord Justice Ward and noted that litigants and lawyers should be aware that there were considerable perils in adding to a good case other aspects or items of dubious merit.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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