| Date | 4 May 2005 |
|
|
| Judgment | Burchell v Bullard, Court of Appeal 8 April 2005 |
|
|
| The Issue | Payment of costs where there are separate awards in respect of claim and counterclaim. |
|
|
| Implication |
Where a claim and counterclaim both succeed, but the amount of the claim exceeds the counterclaim, costs should be awarded in favour of the net winner, with assessment taking into account the conduct of the proceedings. |
printIn the recent case of Burchell v Bullard the Court of Appeal examined the manner in which costs should be awarded to a successful party in litigation. Burchell was a small builder who had agreed to build two large extensions to the home of Mr and Mrs Bullard in Bournemouth. The construction agreement provided for payment in four stages. In August 2000 Burchell requested payment of the third stage of works in the amount of approximately £13,500. This was never paid. The Bullards complained about the work and wrote setting out what they said had to be done before any further payment would be made. There followed numerous confrontations between the parties. Each accused the other of refusing to honour the contract and blaming the other for the difficulties. Eventually, in the Spring of 2001, Burchell instructed solicitors and by the February of the following year, proceedings were commenced against the Bullards for a claim amounting to approximately £18,000. That met a counterclaim exceeding £100,000 for alleged defective works. The litigation rumbled on. Experts were appointed and eventually the trial was conducted in early 2004 in Bournemouth County Court. The judgment, when it came, gave something to everyone. Burchell succeeded in the full amount of his claim, but the judge also gave judgment for the Bullards on their counterclaim for approximately £14,000. Allowing for VAT and interest, the judge ordered the Bullards to pay the difference between the two amounts of approximately £5,000. Although the Bullards had had some measure of success on the counterclaim in respect of defective works, it was by no means as clear cut as the decision in favour of Burchell. In overall terms, the Bullards had been awarded no more than 15% of the monies they had counterclaimed. It is extraordinary that proceedings through the County Court lasting over four years should result in a payment from one party to the other of only £5,000. However, that is only part of the story. The judge then had to deal with the parties' costs. The correct approach in his view was to order separate judgments on the claim and counterclaim. Accordingly, he decided that Burchell should have the costs of the claim upon which he had been successful and the Bullards should have the costs of the counterclaim on which they had been partly successful. The judge undertook to make a detailed assessment of the costs upon an application by the parties. Burchell had been successful on his claim and on the balance of the claim and counterclaim. Despite this, this costs decision was horrific. Burchell had spent over £60,000 in legal fees and expert costs and stood to obtain only 25% of that, since the majority of the trial had been taken up in dealing with the counterclaim. That meant that nearly £50,000 of those costs would be unrecoverable. In addition to this Burchell would be required to pay the costs of sub-contractors who had been brought in as third party defendants. These were estimated at nearly £30,000. On top of that, Burchell would be expected to pay the Bullard's recoverable costs in respect of the counterclaim which were estimated at approximately £60,000. Despite being the successful claimant the recovery of £5,000 was likely to cost Burchell a sum approaching £140,000. Accordingly, his lawyers made an application to the court for leave to appeal the costs order on the basis that an injustice may have been done. Permission was granted and the matter came before the Court of Appeal earlier this month. Lord Justice Ward noted that it was open to the judge to make separate awards upon the claim and counterclaim. However, the general rule was that "costs followed the event", and in this kind of litigation, in the absence of settlement offers, the "event" was determined by establishing who wrote the cheque at the end of the case. The Bullards were the unsuccessful parties overall and accordingly the starting point was that Burchell was entitled to reimbursement of the costs of the proceedings, both claim and counterclaim being taken together. A number of factors then had to be taken into account in assessing the correct proportion of costs to be reimbursed. Firstly it was noted that the claimant had not exaggerated his claim but that the defendants had clearly exaggerated the counterclaim. It was also necessary to consider the manner in which the parties had proceeded with those claims. For example, the judge had been critical in the way in which expert evidence had been provided on behalf of the Bullards. In addition, the Bullard's refusal to mediate needed to be taken into account. Taking all these factors into account, Lord Justice Ward concluded that justice would be achieved by awarding Burchell 60% of the costs of the proceedings of both claim and counterclaim. Burchell was also entitled to a proportion of the costs of the sub-contractor proceedings, which would mean his costs burden of potentially £140,000 would be reduced to a figure of the order of £35,000.
CJ-0517
|
|||
|
© Brewer Consulting |
|||
 |
|||