Greenwich Millennium Village Ltd & Ors v Essex Services Group Plc & Ors

Part 36 is a self-contained and prescriptive costs regime. Where a claimant beats a valid offer, the court should ordinarily order the specified enhancements unless that would be unjust. The claimant’s insurance or subrogated status is irrelevant, and the court need not find that rejection of the offer was unreasonable.

In contractual-chain litigation, costs ordinarily follow the underlying breaches through the chain. A party’s litigation decisions will break causation only in exceptional circumstances, where its conduct rather than the breach is the true cause of the loss. Contractual indemnities carry presumptions that costs were reasonably incurred and reasonable in amount; proportionality is irrelevant unless the contract provides otherwise.

The judgment determined costs and consequential issues following the court’s earlier decision, [2013] EWHC 3059 (TCC), which upheld Greenwich Millennium Village Limited’s claim concerning flooding at a block of flats.

Essex Services Group Plc and Hoare Lea were liable to Greenwich Millennium Village Limited. Essex sought indemnity and contribution down a contractual chain involving HS Environmental Services Limited and D G Robson Mechanical Services Limited. The court considered Part 36 offers, contractual indemnities, causation of costs, apportionment between two claims, interim payments, a stay pending appeal, and an application under the Senior Courts Act 1981.

1. Part 36. Greenwich Millennium Village Limited beat its valid Part 36 offer. Under CPR 36.14(3), Essex was ordered to pay indemnity costs and enhanced interest from expiry of the offer until the main judgment. Part 36 is a self-contained code. The court did not need to decide whether rejection of the offer was unreasonable. The claimant’s insured or subrogated status did not disqualify it from receiving the enhancements.
2. The appropriate uplift on damages and costs was 4% above base rate. The parties’ agreement on statutory interest under section 35A of the Senior Courts Act 1981 did not compromise the separate Part 36 claims.
3. Apportionment and interim payment. Costs were apportioned 70% to Core 2 and 30% to Core 3. The exercise was necessarily broad-brush. Greenwich Millennium Village Limited was awarded an interim payment of £1.65 million from Essex.
4. Contractual indemnities. CPR 44.5 created rebuttable presumptions that contractual costs had been reasonably incurred and were reasonable in amount. Proportionality was irrelevant to costs payable under the contractual indemnities. The paying party bore the burden of rebutting the presumptions. Essex was entitled to recover the relevant costs from HSE on an indemnity basis, subject to detailed assessment.
5. Causation through the contractual chain. The underlying workmanship and supervision breaches remained effective causes of the costs incurred in defending and passing on the claims. The defending parties’ decisions not to settle did not constitute a novus actus interveniens. The ordinary approach in contractual-chain cases applied. Robson was liable to HSE for the relevant costs, generally on an indemnity basis.
6. The Part 36 enhancements were an exception. Robson had not known of the offers. Its lack of knowledge broke the chain of causation for those enhancements, which arose from Part 36 rather than from the underlying breaches. Robson was therefore liable for the general costs on the standard or indemnity basis as specified, but not for the Part 36 enhancements.
7. Stay and section 51 application. Robson had shown a significant risk of insolvency if required to pay more than £1.55 million immediately, while prejudice to HSE from a stay was limited. A stay was granted on the balance of the interim payment pending the appeal. Essex’s application for direct payments under section 51 of the Senior Courts Act 1981 was refused because it would create unnecessary complication and possible delay.

The judgment followed the court’s earlier main judgment, [2013] EWHC 3059 (TCC). The present judgment determined consequential costs, interest, interim-payment and enforcement issues. A stay was granted on part of the interim payment pending an appeal by Robson.