In J Murphy & Sons Ltd v Johnston Precast Ltd (Formerly Johnston Pipes Ltd) – Lawtel 22.12.08 the court was required to determine costs in a claim by the Claimant main contractor to recover sums from the Defendant sub-contractor that the Claimant had paid in settlement of arbitration proceedings with the employer arising out of defective water main refurbishment works. The judge found that there had been a concluded contract but found against the Claimant on the issues of contract terms, breach and causation and found that the Defendant was not liable for any damages. 

The TCC held that where there was no difficulty in identifying the Defendant as the successful party to litigation, an issue based costs order was inappropriate and the question did not arise of whether there were any discrete issues that added significantly to the length of the trial to necessitate displacing the prima facie rule that costs should follow the event.

The appropriate rate of interest on costs from the commencement of proceedings was base rate plus one per cent. The wording of CPR r.36.14(2)(b) was deliberately different to the wording of CPR r.36.14(3)(c) which sets out the consequences when a claimant beats an offer and talks about an interest rate not exceeding ten per cent above base rate. The express power to award interest on the defendant's costs at an enhanced rate is not available under the CPR, whereas it was available in relation to the claimant's costs.