Winner's costs disallowed for unreasonable behaviour
Monday, 12th September 2016
In Cooper and another v Thameside Construction Company Ltd  EWHC 1694, the High Court disallowed a successful party from being awarded all of its costs because of the unreasonable manner in which it had conducted the claim.
The Claimants suffered flooding in their home. Their case was taken over by their insurers who argued that the flooding was caused by a faulty connector fitted by the Defendant. The Defendant admitted early in correspondence to installing the defective plumbing. This was confirmed in its Defence, where it also raised various arguments on causation.
However, it was only after filing its Defence that the Defendant investigated the cause of the flooding. It discovered that it had not been responsible for the defective plumbing. As a result, the Defendant made an uncontested application to withdraw its earlier admission and amend its Defence.
The case went to trial and the Defendant was successful on nearly every point, it having abandoned its causation defences at the Court steps. The question for the Court now was who should pay the costs of the proceedings?
The Claimants argued that the Defendant should pay the Claimants' costs up to the amendment of its Defence on an indemnity basis. The Claimants also argued that, whilst in principle they should pay the Defendant's subsequent costs, these costs should be reduced to reflect the manner in which the Defendant had approached the proceedings. The Defendant resisted these points. There was essentially one cause of action on which it won outright, it said. There was no reason to derogate from the "normal" rule of loser pays.
Carr J accepted the Claimants' argument that costs should be considered in two separate phases: before and after the amendment of the Defence. Carr J found that, in the period before the amendment,
'the Defendant was not running any good defence on liability, only causation arguments which it rightly abandoned, albeit only at the door of the court. This was the result of its own failure to properly to investigate the claim at the outset of its defence. Thameside should, in my judgment, not be entitled to its costs for this period.'
However, neither should the Claimant. Carr J thought it important to bear in mind that the Claimants did not abandon their claim upon the amendment being made. Rather, they continued the claim all the way through trial and lost.
Regarding its costs following the amendment, Carr J found that the Defendant should be entitled to those costs assessed on a standard basis, subject to a reduction of around 10% as a result of its unsuccessful causation defences. 'These defences were not minor sub-issues or mere makeweights', noted the judge. They led to lengthy arguments on causation and a substantial amount of expert evidence. Yet, despite their length, these arguments were hopeless. As Carr J noted, 'Had the defences been maintained at trial, which in reality they could not, they would have failed.' This lack of merit and the manner in which they were pursued right up to the Court door warranted a small reduction to the Defendant's costs.
This case is of interest for a number of reasons. Firstly, it is a pertinent reminder of the importance of properly investigating a claim at the outset, even though a party may be able apply to amend its pleadings at a later date. If unreasonable positions are taken and later amended, or spurious arguments pursued, there may be costs consequences.
Secondly, the case is also noteworthy for opponents of those amending statements of case. The Claimants' error in the present case was to carry on regardless in the face of the Defendant's amendment, where a short pause to investigate the altered position might have been preferable.
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