A & V Building Solution Limited v J & B Hopkins Limited

Part 36 is a self-contained procedural code. A compliant offer attracts its prescribed costs consequences unless it would be unjust to apply them. The discretion under Part 36 is narrower than the general discretion under CPR 44.2, which permits the court to consider non-compliant offers, conduct, partial success and other circumstances.

A litigant in person’s recoverable costs under CPR 46.5 are compensatory and subject to an overall two-thirds cap; the court must assess the work reasonably undertaken rather than award a theoretical proportion of the opponent’s costs. Approved costs budgets should be exceeded only for good reason. Cross-judgments, including costs orders, may be set off where justice and equity require it.

The judgment determined consequential issues following a series of adjudications, enforcement proceedings, an appeal and the court’s merits judgments concerning construction and final-account claims. The principal issues were the allocation and assessment of costs, the effect of the parties’ settlement offers, set-off of cross-liabilities, remission of sums under the Construction Industry Scheme and whether a Third Party Debt Order should be made.

The court assessed the parties’ success over different periods, considered compliant and non-compliant Part 36 offers, assessed costs payable to the claimant as a litigant in person, and determined the net sum payable after costs, interest, set-off and the CIS deduction.

1. Costs allocation. For the period to 4 December 2023, A & V was the successful party under CPR 44.2 and was entitled to its costs, subject to an existing order for costs thrown away on repleading. A & V’s substantial but largely unsuccessful damages claim did not justify depriving it of those costs because the central repudiatory-breach issue had been decided against J&B Hopkins.
2. For the period from 4 December 2023 to 1 March 2024, A & V remained entitled to costs, but J&B Hopkins received an allowance of £8,536 for costs clearly attributable to the failed damages claim. For the period from 1 March 2024 to 18 June 2024, A & V failed to beat an effective Part 36 offer and the usual consequences followed: it was liable for J&B Hopkins’s reasonable costs.
3. For the period from 18 June 2024, the parties had mixed successes and failures on ancillary issues. The appropriate order was no order as to costs, apart from the separate Third Party Debt Order application.
4. Offers. The non-compliant offers were relevant under CPR 44.2 but did not attract the self-contained Part 36 regime. The 9 November 2023 offer was inadequate when properly valued, and it would alternatively have been unjust to take the CIS deduction into account because the issue was not known when the offer was made and was raised late. The 8 February 2024 offer was compliant and was not beaten.
5. Assessment. Under CPR 46.5, the two-thirds provision is an overall cap, not an automatic award. In the absence of proof of financial loss, the claimant’s time was assessed at £19 per hour, with a modest allowance for 200 hours. Consultant fees were recoverable only to the extent that the work represented specialist assistance or work which would properly be a recoverable disbursement.
6. Under CPR 3.18, J&B Hopkins could exceed its approved costs budget only for good reason. Additional expert, trial-preparation and trial costs were allowed only where unanticipated work was established. The court rejected unexplained or foreseeable increases.
7. Cross-judgments and costs orders were set off pursuant to the court’s discretionary jurisdiction. The court confirmed the principal judgment sum, released the stay, assessed the relevant costs, allowed credit for copying charges, required 20% of the amount due to be remitted to HMRC under the CIS, and ordered a Third Party Debt Order for £26,638.42. There was no order as to costs of that application.

The judgment records earlier adjudication, enforcement and appellate proceedings, including the Court of Appeal’s decision on the Part 8 proceedings. Those proceedings were not the appeal determined by this judgment, which addressed costs and consequential payment orders following the court’s merits judgments.