Savoye And Savoye Ltd v Spicers Ltd

Indemnity costs require conduct that takes the case out of the ordinary run and is generally unreasonable to a high degree. Losing a case, advancing a strongly held argument, or relying on evidence that is wrong without dishonesty does not, alone, justify indemnity costs.

On a standard assessment, the paying party is liable only for costs that are reasonable and proportionate. The court may consider the sums in issue, time spent, duplication of work undertaken in adjudication, complexity, importance and the conduct of the parties. Costs incurred in pursuing a summary judgment application after a factual issue has become apparent may be disallowed, while costs caused by late evidence may remain payable by the party responsible.

The claimants had succeeded on the substantive dispute and obtained judgment for about £889,300, together with enforcement of an adjudicator’s decision. The earlier judgment, [2014] EWHC 4195 (TCC), concerned whether installation work constituted construction operations under the Housing Grants, Construction and Regeneration Act 1996, including whether the conveyor system formed part of the land.

The parties agreed that costs should be summarily assessed. The claimants sought indemnity costs on the basis of the defendant’s conduct and claimed £201,790.66. The central issues were whether indemnity costs were justified and what costs were reasonable and proportionate, including costs of the summary judgment application.

1. Indemnity costs. The court rejected indemnity costs. The dispute involved genuine differences about fact, degree and the applicable legal criteria. It was not outside the norm for the defendant to argue that the conveyor system did not form part of the land. Although a witness’s evidence contained errors or misleading assertions, the judge found no dishonesty or conscious attempt to mislead. The conduct was not unreasonable to a high degree.
2. Summary judgment costs. The summary judgment application was reasonably issued. However, once it became apparent that the issue was fact-sensitive and would be better resolved by a site visit and short trial, the claimants took the risk of continuing. The costs of the third hearing were therefore payable by the claimants. The defendant had to bear the costs of its application to adduce further evidence because that evidence could and should have been produced before the first hearing. Work that would have been required for the trial was not excluded merely because it had also supported the summary judgment application.
3. Proportionality. Under CPR Part 1 and CPR Part 44, the court had to allow only costs proportionate to the matters in issue, resolve doubts in favour of the paying party, and consider all the circumstances. Relevant considerations included the relationship between costs and the sum in issue, time spent relative to the hearings, duplication of work already undertaken in adjudication, whether the case was a test case, its importance, complexity, skill and responsibility, and the parties’ conduct.
4. The claim was narrow, fact-sensitive and largely a re-run of the adjudication. A bill exceeding £200,000 was disproportionate to a claim worth just under £900,000 and involving less than two days of hearings. The court summarily assessed the claimants’ costs at £96,465, payable by the defendant within 14 days.

The judgment itself records the earlier substantive decision: [2014] EWHC 4195 (TCC). This judgment determined the parties’ written submissions on costs.