Hardy v Sutherland (t/a David Sutherland Architects) & Anor

A defendant’s written offer to settle and a payment into court are relevant to costs, but they do not have identical procedural consequences. A Part 36 payment attracts the specific costs consequence under Part 36.20. A written offer remains relevant under Part 44.3, but lacks the clarity and certainty of a payment into court. The court may therefore reflect the period between an offer and a later payment by reducing the costs recoverable for that period. The assessment of the appropriate proportion of costs is ordinarily discretionary and will not be disturbed without an identifiable error in principle.

The claimant brought contractual claims against an architect and a builder arising from building works. The proceedings were compromised, leaving the incidence of costs for determination. The county court ordered the architect to pay 75 per cent of the claimant’s costs up to the date on which his Part 36 offer could be accepted, with the claimant paying his later costs. It also ordered the builder to pay 75 per cent of the claimant’s costs, excluding the costs of a later architect’s report.

The claimant appealed against both costs orders. The central issues were whether the relevant date for the architect’s costs consequences was the date of the later payment into court, and whether the claimant was entitled to recover all costs from the builder.

1. Appeal against the architect. The recorder was entitled to reconsider his provisional view during the hearing, but his final order was not the exercise of an unfettered discretion because he had been wrongly advised that he lacked power to alter it. The Court of Appeal therefore reconsidered the appropriate order.
2. Under Part 36.3 and Part 36.20 of the Civil Procedure Rules 1998, the special consequence of requiring the claimant to pay the defendant’s post-acceptance costs arises from a Part 36 payment, not merely from a written offer. The rules leave the treatment of costs incurred between the offer and the later payment to the general discretion under Part 44.3.
3. The court must have regard to an admissible offer under Part 44.3, but the guidance in Amber v Stacey [2001] 2 All ER 88 establishes that a written offer should not be treated as the precise equivalent of a payment into court. The offer was genuine and reasonably close to the eventual assessment, but insufficient recognition had been given to its lesser certainty. The architect’s recovery was accordingly reduced to 50 per cent of his costs for the period between 4 May and 24 August 2000. The appeal against him was allowed in part.
4. Appeal against the builder. The exclusion of the architect’s report was a permissible exercise of discretion because the report substantially duplicated earlier evidence and was principally required for the claim against the architect. The alleged agreement that the builder would pay all the claimant’s costs had not been properly argued before the recorder and remained opaque. That part of the appeal was dismissed.

• Court of Appeal (Civil Division): appeal from the Buxton County Court, where Mr Recorder Coates made the disputed costs orders. The appeal against the first defendant was allowed in part; the appeal against the second defendant was dismissed.