McGlinn v Waltham Contractors Ltd & Ors

The court has a broad discretion over costs under CPR 44.3, guided by the overriding objective. A claimant who fails against both defendants will ordinarily bear the costs of the unsuccessful claims and will rarely obtain a Bullock or Sanderson order. Where success is divided between liability and causation or quantum, an issue-based costs order may be appropriate. The court should assess success as a matter of substance and reality, consider payments into court, exaggeration and conduct, and may express the result by percentages. Interest may be awarded for being kept out of money established as due, even where the claimant has not yet incurred the relevant expenditure.

This was a further judgment concerning costs and interest following the defects trial in [2007] EWHC 149 (TCC). The claimant had recovered damages against Huw Thomas Associates but nothing against Waltham Contractors Ltd on the relevant defects. The court had previously ordered Waltham to receive its costs, subject to determining whether those costs should be paid by the claimant or by Huw Thomas Associates.

The claimant sought interest on damages and a Bullock or Sanderson order for Waltham’s costs. As between the claimant and Huw Thomas Associates, the parties disputed who was the successful party and whether costs should follow the event or be divided by issues.

1. Interest. The rejection of an uplift in repair rates did not affect the separate claim for interest. Interest was compensation for being kept out of money established as due. Actual expenditure was irrelevant. Interest was awarded at one per cent over base on £380,225.49 from 4 May 2005 to 28 March 2007, and on £58,625.27 from 29 March 2004 to 28 March 2007.
2. Waltham’s costs. The court’s power to make Bullock or Sanderson orders survived the CPR and was governed by CPR 44.3 and the overriding objective. The relevant question was whether the claimant had succeeded against one defendant but failed against another in respect of the same costs-generating claims. The claimant had failed against both Waltham and Huw Thomas Associates on the 16 relevant Scott Schedule items. The existence of unrelated successful claims against Huw Thomas Associates did not alter that conclusion. The application was therefore inappropriate in principle, consistently with Beoco Ltd v Alfa Laval Co Ltd [1995] 1 QB 137.
3. The joinder of Waltham was also unreasonable. The claimant was not genuinely uncertain which defendant was responsible, Huw Thomas Associates had not blamed Waltham in the conventional sense, and the allegations concerned architectural or aesthetic matters outside Waltham’s pleaded responsibility. Even if joinder had been reasonable, it would have been unjust to make Huw Thomas Associates pay costs where its factual references to Waltham were largely proved correct.
4. Costs between the claimant and Huw Thomas Associates. The starting point was that costs follow the event, but the court had to identify who had won as a matter of substance and reality and could make issue-based orders. The claimant was the qualified winner on liability, having recovered damages and beaten the payment into court. Huw Thomas Associates was the clear winner on causation and quantum because the demolition and rebuilding case failed and the damages claim was substantially exaggerated.
5. The parties’ costs were apportioned 65 per cent to liability and 35 per cent to causation and quantum. After deductions reflecting partial success, exaggeration and the payment into court, Huw Thomas Associates was ordered to pay 45 per cent of the claimant’s costs incurred against it, and the claimant was ordered to pay 25 per cent of Huw Thomas Associates’ costs. The percentages were not netted off.