Price & Anor v Carter (t/a Ian Carter Building Contractors)

Costs are assessed by reference to the work reasonably required by the issues, the material presented, and the importance and value of the dispute. On the standard basis, the court allows costs that are reasonably incurred, reasonable in amount, and proportionate to the matters in issue. A party’s inconvenient or excessive presentation may justify substantial responding costs.

When assessing the consequences of a Part 36 offer in related arbitration proceedings, the court may consider the real commercial position, including arbitration fees which the receiving party has paid and recovered. Where proceedings produced no benefit and a reasonable offer was not bettered, enhanced interest may be ordered.

The claimants applied for permission to appeal an arbitrator’s award and for an extension of time. The defendant applied for summary judgment to enforce the award and for transfer of related enforcement proceedings from Truro County Court to the Technology and Construction Court.

The court had previously extended time but dismissed the application to set aside the award, leaving the assessment of the defendant’s costs for determination. The issues were whether the claimed enforcement and arbitration costs were reasonable and proportionate, and whether enhanced interest or indemnity costs should be ordered in light of the defendant’s Part 36 offer.

1. Costs. The court allowed the defendant’s claimed costs of £2,574.87 for enforcement and transfer proceedings and £15,534.50 for the arbitration claim. The claims were legally and factually substantial, involved extensive and inconveniently arranged documents, wide-ranging allegations concerning the arbitration, lengthy witness statements, and an award exceeding £100,000. Those circumstances justified the time spent by the solicitors and counsel.
2. Under CPR 44.4, costs must not be unreasonably incurred or unreasonable in amount. On the standard basis, the court allows only costs proportionate to the matters in issue and resolves doubt in favour of the paying party. On the indemnity basis, doubt is resolved in favour of the receiving party. The costs here were reasonable and proportionate on the standard basis, so the question of indemnity costs was academic.
3. Part 36 offer and interest. The defendant’s offer of £100,000 had not been bettered in real commercial terms. Although the net recovery was approximately £3,000 less than the offer, the claimants also had to pay arbitration fees substantially exceeding that difference. The arbitration fees were reimbursement of sums paid in advance and did not make the award more advantageous than the offer in the relevant sense.
4. The Civil Procedure Rules 1998 did not directly govern the arbitration, but the court was exercising its own powers on the costs application. It was therefore appropriate to treat the defendant as a party whose Part 36 offer had not been bettered. The appeal should never have been brought, and interest at 10 per cent was awarded from 5 April 2010 until payment. The arbitration costs and interest up to that date remained matters for the arbitrator.

First-instance decision on the assessment of costs and interest following the court’s earlier dismissal of the claimants’ application to set aside the arbitrator’s award.