Charles Church Developments Ltd v Stent Foundations Ltd & Anor

Failure to comply with a construction pre-action protocol can justify an early costs order where the breach caused proceedings or litigation costs that might otherwise have been avoided. The court may decide the costs consequences before mediation or trial.

The order should place the innocent party no worse than compliance would have done. It may address only the additional costs caused by conducting work in the more expensive environment of court proceedings, taking account of the lower-cost and proportionate nature of protocol work.

The claimant brought proceedings concerning losses arising from piling incidents. It issued the claim before completing the TCC pre-action protocol and, although it relied on possible limitation difficulties, did not apply for directions under paragraph 6 when proceedings were issued.

The first defendant sought costs orders up to the proposed mediation. The issues were whether the breach had caused proceedings or additional costs that might otherwise have been avoided, whether the court should decide the matter immediately, and what order would fairly reflect the position had the protocol been followed.

1. Breach. The claimant was entitled to rely on paragraph 6 of the TCC pre-action protocol because compliance might have led to limitation difficulties. It nevertheless breached the protocol by failing to apply to the court, on notice, for directions when it issued proceedings. Parties should generally begin the protocol process before limitation difficulties arise.
2. Effect. Non-compliance could be taken into account under paragraph 2.1 of the Practice Direction—Protocols and CPR rule 44.3(v)(a). Paragraph 2.3 applied because the breach had probably deprived the parties of an opportunity to settle and had caused proceedings costs that might otherwise have been avoided.
3. Timing and measure. The court should generally deal with protocol cost consequences at an early stage. Later mediation or trial information was unlikely materially to improve the assessment. The objective under paragraph 2.4 was to leave the innocent party no worse off than compliance would have done.
4. Orders. The claimant was ordered to pay 50 per cent of Stent’s relevant costs and to bear 50 per cent of its own relevant costs. Stent received an interim payment of £50,000 and £21,500 for the application. Detailed assessment was deferred until the end of the case. Permission to appeal was refused.