SUBSTANTIAL COSTS INCURRED IN ARGUING ABOUT COSTS: NIGHTMARE IN BELGRAVIA?

In Chliafichtein -v-Wainbridge Estates Belgravia Ltd [2015] EWHC 47 (TCC) Mr Justice Coulson made some comments in relation to the escalation of costs in preparing for an argument about who should pay the costs.

THE CASE

The claimant obtained an ex-parte injunction preventing the defendant carrying out excavations close to a party wall shared with the claimant’s property.  The defendant was content for the injunction to continue (on the basis that the relevant work had been concluded) but sought an order that the claimant pay its costs.

KEY POINTS

• The claimant had not, on the facts, obtained unreasonably in obtaining an injunction.
• The defendant had been unreasonable in denying it breached the method statement.
• It would have been better if the defendant had accepted the breach and its liability to pay costs rather than have a hearing about the costs issue.

COSTS INCURRED IN ARGUING ABOUT COSTS

1. In consequence of this stance, Edwards-Stuart J had no option but to require the parties (if they wished) to serve evidence about the alleged breach, so that costs could then be dealt with at a separate hearing. The parties have therefore put in a considerable amount of written evidence about precisely what was happening on 8 December, and whether or not the defendant was in breach of the party wall award. This has involved, amongst other things, the service of four witness statements from the defendant, and a statement from his party wall surveyor; an additional statement from the claimant, together with a statement from his party wall surveyor; and a report dated 23 December 2014, from Dr Zeljko Cabarkapa, the claimant’s geotechnical expert. The attendance at today’s hearing has numbered 18 people, excluding me, and has involved oral evidence and cross-examination. Obviously the costs of all of this has been significant, yet they have been costs that have been incurred solely in order to enable the parties to argue about their liability for costs, surely the most pointless exercise in any civil litigation.

THE JUDGE’S FINDINGS

The judge found that the defendant had breached the method statement made under the party wall award.  However the defendant argued that the claimant had acted unreasonably in obtaining an injunction.

THE CLAIMANT’S CONDUCT

The judge considered the arguments about conduct in some detail.

5. THE CLAIMANT’S CONDUCT

1. The claimant’s conduct has to be seen against a certain amount of history of bad feeling between the parties. I note that:

(a) The claimant unsuccessfully sought judicial review of the decision granting planning permission for this major redevelopment. As a result of changes to the planning law that is now the only way in which a householder can effectively appeal against the grant of planning permission for a neighbouring property, so in my view no criticism can be made of the claimant for taking this course.(b) The claimant appealed an earlier party wall award. I am told that that appeal was allowed by consent, so plainly no criticism can be made of the claimant as a result. I also understand that there is an existing appeal against this party wall award, but that was not issued until after the injunction, so it is irrelevant for these purposes.

(c) There have been threats of litigation by the claimant on a number of occasions. I also understand that the defendant has responded to the effect that any disruption to the building works might cost the claimant up to £500,000 per week.

1. The party wall award was dated 27 November 2014. It did not put an end to the difficulties. Indeed, it is plain that from 29 November onwards, the date that notice was given of pile probing works to commence on 1 December, that there were still various disputes between the parties. First I should note that on Mr Hartigan’s evidence, it would appear that the pile probing works had actually commenced before that notice was even given, because he talks about the pile probing works being carried out in the last full week of November 2014. Secondly, during the week of 1 to 5 December, there were exchanges of correspondence between solicitors and problems emerged relating to the provision of information, surveys, monitoring data, trigger levels and the like. It is plain that, whether rightly or wrongly, the claimant felt that information was not being properly provided to him.
2. On 8 December itself, it appears that the following happened:

a) Once the claimant had noticed the digging of the hole he contacted his solicitors, they sent an email at 10:20am saying (correctly) that the defendant was in breach of the party wall award by failing to install a trench box;(b) The defendant’s solicitors responded at 12:41 denying (incorrectly) that they were in breach of the method statement. There is a reference in that letter to an undertaking that the defendant would comply with the method statement. It is therefore that letter in particular on which Mr Weekes relies to say that the claimant’s subsequent resort to court was unnecessary.

(c) The claimant responded to that just after 2:00pm by indicating that an appointment had been arranged with Edwards-Stuart J at 3:00pm and asking for a formal undertaking to the court. The defendant’s response was again to argue that there was no breach of the party wall award. No formal undertaking to the court was offered.

1. When deciding whether or not the claimant acted precipitately I have to bear in mind all of the matters noted in paragraphs 20-22 above, as well as my conclusions about the defendant’s conduct on site. It is plainly a balancing exercise. However, it seems to me that the most significant factors in that exercise are these:

(a) No 10, Grosvenor Crescent is the claimant’s family home. He is entitled to take what steps he reasonably can to protect his property and his right to enjoy it with his family. Given the history that I have summarised, I can sympathise with the claimant’s concerns on the morning of 8 December, when works which were plainly and obviously in breach of the party wall award were being carried out without warning or notice.(b) By contrast, the defendant’s conduct on site was cavalier, again for the reasons that I have noted. The claimant was therefore entitled to be concerned, both about what was happening on site and the fact that, notwithstanding that conduct, the defendant was resolutely maintaining that it was not in breach of the party wall award.

(c) The defendant did not accept liability either on 8 December or indeed, at any time thereafter. The informal undertaking that was offered has to be seen against the background of the repeated denials of liability by the defendant. Furthermore, these denials were advanced on a number of bases, such as the ground levels, and the nature of the material in which the excavations were being carried out, which were, as I have found, obviously wrong, and which the defendant would or should have known were wrong.

(d) The fact that the claimant successfully obtained an injunction on 8 December, which was maintained on 10 December, is clearly a relevant factor. I accept Mr Weekes’ point that this cannot alone be determinative, and the defendant is entitled to raise what points it wishes to on the argument about costs. But I cannot escape the fact that the claimant was successful in obtaining, and maintaining, an injunction from Edwards-Stuart J.

(e) For the reasons that I earlier indicated, I am concerned about the costs that have been incurred in relation to these proceedings since 10 December. It does seem to me that, given my findings as to what happened on 8 December, it would have been much better for the defendant to acknowledge that a mistake had been made and that the usual costs consequences flowed, so that the parties could then move on. The defendant acted unreasonably in refusing ever to accept liability.

1. I agree and endorse the submission that the seeking of an ex parte injunction is a last resort. I also accept that the claimant did act very quickly on 8 December. However, taking into account all of the factors in the balancing exercise, and in particular those set out in paragraph 23 above, I conclude that the claimant did not act unreasonably in seeking an injunction on 8 December. In all the circumstances, the claimant was entitled to seek and obtain the ex parte injunction. So for those reasons of conduct, I also conclude that the claimant is entitled to his costs.

6. OTHER MATTERS

1. Mr Weekes argued that the claimant should not have his costs because the injunction was pointless. That submission is based on the suggestion that no further probing works will be done in the area of the party wall. The difficulty with that submission for me is a pragmatic one: I simply do not know what is likely to happen in the future. Nor does the claimant. It may be that no further probing works will be carried out, but this is a major project involving large sums of money, and it is simply not possible for me to say whether or not in the future, such works will, in fact, be required.
2. For completeness I should say that, although Mr Isaac referred to a possibility of nuisance in his skeleton, it is unnecessary for me to consider this, given the strict liability on the part of the defendant to comply with the method statement. Moreover, I note that the injunction granted in the case to which he referred, Hiscox Syndicates Ltd v The Pinnacle Ltd [2008] EWHC 145 (Ch), was subsequently significantly modified by Jackson J (as he then was).
3. That therefore deals with the question of liability for costs. I am anxious now to go on and summarily assess the claimant’s costs, simply to save the parties from a further round of expensive argument as to the precise level of costs which should be paid. I note that all of this effort has been expended on costs which, even when taking both parties’ costs together, amount to just over £60,000.