Brenda Vainker & Anor v Marbank Construction Ltd & Ors (Costs)

Costs are governed by the broad discretion in CPR 44.2. The unsuccessful party will usually pay the successful party’s costs, but an issue-based or percentage order may be made where justice requires it.

A party’s failure on individual issues does not, by itself, justify reducing its costs. The court should consider whether the issues were pursued unreasonably, whether they caused substantial additional costs, the structure of the litigation, the overall result and any effective settlement offers. In complex defects litigation, the claim may properly be assessed as a whole. A percentage order is generally preferable to attempting to isolate the costs of individual issues. Approved costs budgets provide a realistic starting point for interim payments, subject to case-specific adjustments.

The judgment concerned the costs consequences of a substantial defects action involving Brenda and François Vainker against Marbank Construction Ltd, Mercer & Miller and SCD Architects Ltd. The claimants succeeded overall but failed on several defects and recovered different sums from the defendants. Mercer & Miller had settled before trial.

The court had to determine the appropriate costs orders against Marbank and SCD, the effect of SCD’s without-prejudice save as to costs offer, interim payments on account, interest on costs and costs reserved from an earlier witness-statement application.

1. Marbank. The claimants were the clear net winners against Marbank. Their failure on particular defects, alternative accommodation and other issues did not make those claims unreasonable. The claim was a complex defects claim containing major and minor items which should properly be considered as a whole. No percentage reduction was justified. Marbank was ordered to pay the claimants’ costs of the action.
2. SCD. SCD was concerned with only a limited number of claims, although some were substantial. The claimants succeeded on only part of the case against SCD, and the claims under the Defective Premises Act 1972 added little to the contractual claims against Marbank. The claims were not unreasonably pursued, but an issue-based allocation was appropriate. As precise issue costs could not practicably be assessed, SCD was ordered to pay 15% of the claimants’ costs of the claim.
3. SCD’s offer of £145,000 inclusive of VAT, interest and costs was considered with the benefit of hindsight, applying Walker Construction (UK) Ltd v Quayside Homes [2014] EWCA Civ 93. The claimants had bettered the offer. No post-offer costs sanction was imposed against them.
4. Interim payments were ordered by reference to the approved budget. Marbank was to pay 80% of the budgeted costs and SCD 90% of 15% of the budgeted costs, within 28 days. Interest on costs was awarded at 3% above base rate from payment of the costs, not from the date liability was incurred.
5. The claimants were awarded 50% of the costs of the earlier application concerning non-compliant witness statements, payable by Marbank.

First-instance costs judgment following the substantive trial. No appeal history was stated in the judgment.