Monavon Construction Ltd v Davenport & Anor

In exercising the costs discretion under Civil Procedure Rules 1998, r 44.3, the court must consider all the circumstances, including conduct, partial success and offers to settle. Where claim and cross-claim are closely interdependent, it may be inappropriate to assess them separately. A marginal financial result does not necessarily identify a successful party. Where both parties have achieved substantial success on important issues, neither has behaved unreasonably, and there is no relevant offer or payment into court, the proportionate order may be that each party bears its own costs.

This was a costs judgment following a construction dispute between Monavon Construction Ltd and the Davenports. Monavon had recovered just under £100,000 on its claim, subject to abatements, set-offs and cross-claims. The Davenports had recovered just over £100,000 for defective and incomplete work. The final net judgment was in the Davenports’ favour by just under £5,000.

The court considered the parties’ conduct, the late development and amendment of the defects claim, settlement efforts, the pursuit of disputed issues, expert evidence and the relationship between the claim and cross-claim. The central issue was the appropriate costs order in circumstances where both parties had succeeded on substantial aspects of the litigation.

1. The court exercised its discretion under r 44.3 of the Civil Procedure Rules 1998. Relevant circumstances included the parties’ conduct before and during proceedings, whether a party had succeeded on part of its case, and any payment into court or admissible offer to settle. Conduct included compliance with the TCC pre-action protocol, the reasonableness of pursuing or contesting issues, and exaggeration of a claim.

2. The claim and cross-claim were so closely interdependent that it would be artificial to determine their costs separately. The litigation involved reciprocal issues of liability, defects, abatement and set-off.

3. Although the Davenports obtained the small net judgment, neither side could fairly be treated as the successful party. The Davenports succeeded on important issues concerning the contract and defective work. Monavon succeeded on the alleged cap on its claim and substantially reduced the defects claim. Their respective financial and issue-based successes substantially cancelled each other out.

4. Neither party’s conduct justified an adverse costs consequence. The Davenports’ late amendment and quantification were criticised to a limited extent, but the underlying defects had been raised earlier and the lateness did not materially prejudice settlement or conduct of the litigation. The pursuit of the alleged cap did not materially increase costs. The use of separate experts was reasonable because the dispute was not sufficiently defined for a single jointly appointed expert.

5. In the absence of sealed offers or payments into court, and because an issue-based costs order was inappropriate, the proportionate order was that each party pay its own costs, subject to earlier procedural costs orders. The court also confirmed the agreed figures for replacement carpets and damp proofing and directed the parties to submit an agreed order.