The following real case shows that the potential cost consequences for disrespecting the court and procedural rules are serious. It also demonstrates the unpredictable twists and turns of the cost regime during a case. Read on to learn more about the particulars of this case and what we can all learn from it.
Prosperity Law in Manchester secure another win for their clients
The dispute resolution team at Prosperity Law LLP Manchester, headed by Paul Magee, Partner and solicitor, were instructed by clients (the Claimants) to pursue a claim for damages against a builder (the builder) who carried out negligent extension works to their home. The builder was dismissed as he took too long to complete the work, which had to be demolished and re-commenced by a reputable construction firm.
The builder, a litigant in person, defended the claim and filed a lengthy defence prepared by his counsel. The builder initially engaged fully in the court process and attended two case management hearings but later did not comply with directions in that he failed to serve witness evidence and a counter schedule of loss.
The builder refused to engage in mediation and also did not properly engage in negotiations despite the claimants, as noted by the Judge in giving judgement, trying very hard to engage to try to settle. There would be lengthy periods of radio silence, and when there was communication by the builder, it was not sufficiently clear.
The trial and outcome
The case was listed for a three-day trial. The claimants and Prosperity Law LLP prepared for the likelihood that the case could take three days. The defendant was aware of the hearing and even requested an adjournment prior to the hearing without explaining why he required an adjournment.
Surprisingly, the defendant did not show up on the first day of the Trial. The case proceeded in his absence, with the Judge hearing evidence from the claimants. As expected, Judgement was granted and damages assessed, which included damages for the financial loss incurred, in addition to general damages for inconvenience and interest. Also, as expected, the builder was ordered to pay the costs, but there was a more positive twist than expected on the issue of costs.
The intermediate cost track and uplift request
When the claim was initially tracked, it was put on the highest track, the multi-track. Fixed costs do not apply in the multi-track. At the Case Management Hearing, the case was re-tracked and placed on the upper band (4) of the intermediate track, which is a fixed cost regime and can be less generous to a winning party. Although a cost budget had been prepared by the Claimants, the CCMC Judge at the first CMC hearing dispensed with the need for a budgeting exercise to be carried out.
At the second CCMC hearing, the case was transferred to the Business and Property Court (TCC list), but no reference was made to tracking. At the Trial, and bearing in mind that the pertinent track at that point was the fixed cost intermediate track, the Judge was invited to consider granting a 50% uplift on the fixed costs, which he acknowledged he was not too familiar with. The Intermediate Cost track was only introduced in October 2023, and Judges and solicitors are still getting to grips with it.
Requesting and being granted a 50% uplift on fixed costs is not common at all. An uplift is appropriate where a party has acted unreasonably, and of course not turning up at trial, not complying with court directions, not engaging in mediation, and not properly engaging in ADR are all examples of unreasonable conduct.
What did the Judge decide?
The Judge considered the invitation to grant an uplift and, thinking outside the box, decided that rather than grant an uplift, he would re-track the matter back to the multi-track. On that basis, he ordered that the builder would pay the costs on the indemnity basis (a much more favourable basis than the standard basis). In other words, the case was out of the fixed cost regime and back into the regime of reasonable costs but reasonable costs on an indemnity basis.
The Judge was mindful that there had not been a budgeting exercise carried out previously when the case was initially on the multi-track, but he saw no difficulty with that and made an order and issued directions that the Claimants’ costs would be summarily assessed, which would avoid the need to carry out a cost budgeting exercise. This was a great result for the Claimants.
What we can learn from this case: A sting in the tail for a non-compliant party in litigation
The case serves as a warning to any party involved in litigation, but especially litigants in person, that severe cost penalties will arise if there is disrespect shown to court rules and procedure and if disrespect is shown to the other party by messing them about and unnecessarily causing the case to become protracted by not trying to engage properly in trying to settle.
The case also serves as a reminder that, as a result of the complex cost regime which exists, it is not always possible to predict from the outset what the eventual cost outcome will be. What is very clear, however, is that unreasonable conduct is highly likely to be penalised when it comes to the question of the costs.
If you may be involved in a dispute and are unsure what to do, seeking specialist legal advice at an early stage can make a significant difference to both the process and the result.
Call us on 0161 667 3686 or fill out the form.
About the author
Paul Magee is a Partner and the Head of Dispute Resolution and Contested Probate teams at Prosperity Law LLP. Paul has been a litigation solicitor for over 30 years and is very experienced. He now specialises in property litigation, contested probate and employment disputes.
Paul is always happy to have an initial, no-fee obligation chat. He believes in providing value to his clients, who include commercial developers, landlords, tenants, insurers, Letting Agents, sports personalities, musicians, and many others.
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