Failure to respond or negotiate before proceedings can prove costly.
The Court of Appeal has considered whether a successful Defendant should be punished as to costs due to unreasonable behaviour on its part The Claimants in these proceedings are the owners or tenants of various premises in Nelson’s Yard in Camden, London. The Defendant, Mr Eziefula, is the owner of adjoining premises at 11 and 13 Camden High Street.
On 30 January 2008, the Claimants issued proceedings against Mr Eziefula to restrain him from further carrying out various works of excavation which they thought would damage their properties. They claimed that the works were being carried out without Planning Permission and in breach of the Party Wall Act 1996, and without having allowed their surveyor an opportunity to inspect the works.
Prior to the commencement of proceedings, the Claimants and/or their solicitors had written on 4 occasions to the Defendant between May and July 2007 in order to set out their concerns regarding the works, and seeking access for their surveyor to inspect, but there had not been any response at all to any of these letters. In particular, the Claimants were concerned that the excavation works were so close to their properties that there was a real risk they would weaken or cause damage to their foundations.
It was only after the service of proceedings that the Defendant chose to respond. He then agreed to the Claimants’ surveyor inspecting the excavation works and trial holes were drilled which established that, in fact, no damage had been caused to the foundations.
Subsequent to this, the Defendant served a Party Wall Notice in relation to the further works that it wished to undertake and matter were essentially resolved between the parties save for the question of the costs of the legal proceedings. The Defendant’s solicitors invited the Claimants to discontinue their proceedings and pay their costs but the Claimants thought the Defendant should pay their costs given his “obstructive and truculent behaviour”, .
Eventually, in March 2012, the Claimants discontinued the proceedings and the Court had to decide who should bear the costs. The normal presumption when a Claimant discontinues proceedings is that the Claimant will pay the costs but, in all the circumstances, the Claimants argued that this presumption should not apply.
The Judge at first instance found in favour of the Defendant Whilst he understood why the Claimants had felt it necessary to issue proceedings in light of the Defendant’s conduct, he did not think that the Defendant had behaved so unreasonably as to deprive himself of the normal right to recover his costs when a claim was not pursued.
However, the Court of Appeal disagreed. Whilst it accepted that it could not look at the merits of the claim or take heed of the fact the Claimants had made a pragmatic decision to discontinue to save further costs, it felt the Defendant’s unreasonable pre-action conduct was sufficient to displace the normal presumption that the successful party recovers its costs.
The Court had regard to the lack of willingness of the Defendant to set out his position or narrow the issues or discuss mediation or settlement. Whilst the letters he did not respond to were not formal letters of claim and did not spell out the consequences of not responding, they made clear the Claimants’ concerns and the rules of Court make it clear that parties are liable to be punished for non-compliance with the terms and/or spirit of the pre-action protocols intended to avoid the need for litigation. Clearly, this is particularly so when it causes proceedings to be brought.
Looking at the matter afresh, the Court held that Mr Eziefula should pay the Claimants’ costs up until 3 May 2008 when he finally made clear his case and that each party should pay their own costs thereafter.