Buildability Ltd v O'Donnell Developments Ltd

Where parties agree declarations in Part 8 proceedings but leave costs for determination, the court assesses success by reference to the practical value of the declarations and the conduct of the proceedings. The general rule remains that the unsuccessful party pays the successful party’s costs, subject to the court’s discretion.

Costs may be summarily assessed where the issues are manageable and finality is desirable. A conditional fee agreement does not automatically justify recovery of a success fee. The additional liability must be assessed separately from base costs, having regard to the circumstances reasonably apparent when the funding agreement was made. A success fee may be refused where the proceedings were avoidable, the relief was weak or substantially amended, or the claimed success was undefined. Base costs must also be reduced where disproportionate or unreasonable.

Buildability Limited commenced Part 8 proceedings against O’Donnell Developments Limited concerning the effect of contractual notice provisions, an agreed programme, and a supplemental agreement on extension-of-time and loss-and-expense claims.

The parties subsequently agreed the terms of three declarations and asked the court to determine costs. O’Donnell had also applied to set aside the Part 8 directions, dismiss the claim, or require the matter to proceed under Part 7. The remaining issues concerned success, the costs of that application, summary assessment, a conditional fee agreement, and the proper amount of recoverable costs.

1. Outcome and success. Buildability was the successful party because it secured two declarations of practical value. The agreed declaration concerning the contractual notice provision reflected the substance of the relief sought, and the declaration concerning the supplemental agreement materially affected claims 2, 4 and 6. The declaration concerning the agreed programme was largely anodyne.
2. Costs of O’Donnell’s application. There was no order as to the costs of the application. O’Donnell did not obtain dismissal or conversion to Part 7, but it identified serious problems with the original form of declarations 2 and 3. Those declarations were substantially amended, and factual evidence would have been required if they had remained in their original form.
3. Summary assessment. The costs were suitable for summary assessment. The proceedings had been resolved within about five weeks, there had been no hearing on the substantive claim, and the court could assess the issues without detailed assessment.
4. Conditional fee agreement. Under CPR Part 44.3(2), CPR Part 44.4, and paragraphs 11.4 to 11.9 of the relevant Practice Direction, additional liability is considered separately from base costs. The court refused the 100 per cent success fee. The pre-action protocol had not been followed, the first declaration was comparatively straightforward, the other declarations were materially amended, declaration 2 was largely anodyne, and the meaning of success had not been established.
5. Base costs. Although Buildability was entitled to costs in principle, its bill was disproportionate and included excessive or otherwise unrecoverable work. The recoverable amount was reduced to £28,000.
6. Order. O’Donnell was ordered to pay Buildability £28,000 in costs by 18 December 2009. No VAT was payable.