(1) Beattie Passive Norse Ltd (2) NPS Property Consultants Ltd – and – Canham Consulting Ltd (Costs Hearing)

We reported last month on the judgement of Beattie Passive Norse Ltd (BPN) and NPS Property Consultants Ltd (NPS) v Canham Consulting Ltd (Canham) where Mr Justice Fraser dismissed the claim brought by NPS in its entirety and awarded the other claimant, BPN, the sum of £2,000 in damages against Canham in respect of a far larger pleaded claim of approximately £3.7 million. Our analysis of the judgement can be found here (LINK). In summary Mr Justice Fraser found that both blocks had “catastrophic” defects that were nothing to do with Canham’s design and the defects that did arise from Canham’s negligence could have been remediated. BPN were only able to recover losses relating to the cost of the remedial works to the second block which were commenced but never finished costing £2,000.

Following a costs hearing on 25 May 2021, BPN have been ordered to pay £500,000 in costs to Canham. Mr Justice Fraser heard that Canham had made two Part 36 offers both being for considerably more than the £2,000 awarded in damages. The first offer Canham made was for £50,000 plus costs for certain elements of the claimants’ claim which was rejected. Canham then subsequently made an offer on the same terms save that it was now for £110,000.

As the award of damages was £2,000, Canham did not need to rely on the second offer rather they could rely on the first offer which would ordinarily entitle Canham to be paid its costs from the last date of acceptance, 11 January 2021, with BPN entitled to their costs up to that date. Canham however did not seek such a conventional order, they sought an order for all their costs of the action from its commencement, to be assessed on the indemnity basis. Canham sought the order on the basis that:

1. BPN’s claim wholly ignored the factual causation issue, namely that the foundations that were constructed were not the foundations as designed by Canham.
2. The final award of damages was so small by comparison to the sum claimed.
3. The claim was advanced and supported by Mr Hughes, the structural engineering expert appointed by BPN who was heavily criticised by Mr Justice Fraser in the substantive judgment and Canham argued that the expert’s conduct alone should justify an award of indemnity costs.
4. So far as the claim by BPN is concerned, this was a claim brought without the authority of its board of directors. To substantiate this, Canham provided a witness statement from Mr Ron Beattie, a director of BPN which was signed and dated 20 March 2020 but was not served with the Court until 21 May 2021 and there was no explanation for this 14-month delay.
5. BPN refused opportunities to narrow the issues and wholly ignored a Notice to Admit Facts served by Canham.

BPN argued that Canham had unreasonably refused to mediate prior to early 2021, when a mediation was eventually held.

Mr Justice Fraser dismissed BPN’s argument stating that Canham was not unreasonable in refusing to mediate as in all the circumstances of the case this refusal came at a time when BPN were advancing a factually untruthful case.

Whilst Mr Justice Fraser noted his deep criticism of BPN’s expert, he did state that the conduct of the expert alone would not justify an award of indemnity costs. However, he went on to state that it was ‘plainly unreasonable’ for BPN to not have accepted the first Part 36 offer and ordered that BPN pay Canham’s costs going back to an information request in March 2020, assessed on the indemnity basis.

As we discussed last month, the case serves as an important reminder to experts as to what the Courts expect of them including: dealing with matters within their expertise; giving evidence (written and oral) to assist the Court rather than being an advocate for the party instructing them; and not seeking to introduce new and / or irrelevant issues.

The latest judgement will come as a stark reminder of the cost consequences of not accepting a Part 36 offer but also a reminder that the court has discretion when awarding costs outside the realms of Part 36, in particular when assessing the manner in which a claimant has pursued its case and to the extent to which a claimant has exaggerated its claim. Mr Justice Fraser has further highlighted the Court’s reluctance to penalise a party who refused to mediate in instances where the other party has conducted litigation on a wholly false factual basis.