This case offers a pertinent reminder of the importance of thoroughly investigating a claim before submitting a defence, after the High Court refused to award the successful party full costs because of the way it had handled the claim.
Mr and Mrs Cooper (the claimants) suffered £6.5 million worth of damage to their luxury North London home after defective plumbing caused a severe flood. Their insurers filed a subrogated action claim against the defendant construction company. It was common ground that a faulty connector in the bathroom was the cause of the flood. The defendant admitted early in the correspondence that it was responsible for the defective plumbing and thus raised various arguments on causation.
However, it was only once the defence was filed that the defendant thoroughly investigated the claim and discovered it had not in actual fact been responsible for installing the faulty connector that caused the flood. As a result, the defendant filed an uncontested application to withdraw its earlier admission and subsequently obtained permission to resile. The claimants, however, did not abandon or review their position despite amendments to the claim being made.
The case went to trial and, having dropped its causation defences on the Court steps, the defendant was successful on nearly every point. The issue of costs was then dealt with by the Court.
The claimants sought costs incurred up to the point of the removal of admission, and argued for a reduction in costs based on the defendant’s handling of the case. The defendant resisted these points and sought costs on a standard basis. Whilst Carr J accepted the claimants’ argument that costs should be considered in two phases (pre and post-amendment), he held that there was no reason to derogate from the normal rule that the loser pays the winner’s costs. However, in deciding on a costs order, Carr J did consider the late timing of the amendment, as well as that the claimants did not re-evaluate their stance once the amendment had been made.
As such, Carr J found that the defendant should be entitled to the costs of the proceedings assessed on a standard basis, by virtue of winning, but that a reduction of around 10% should be made as a result of its poor handling of the case.
Two lessons are borne out of these proceedings. Firstly, thorough investigation of claims against should be made from the outset and especially before offering a position, since a subsequent altered position may taint any judgments for/against you. And secondly, for those facing any amendments within a case, reevaluation of both positions before returning to proceedings is a necessity; otherwise what previously seemed like a resounding win could, rather quickly, turn into a loss and an order to remunerate the opponent for costs.