Bank of Ireland (Governors and Company of) & Anor v Watts Group Plc, Court of Appeal - Technology and Construction Court, October 06, 2017, [2017] EWHC 2472 (TCC)

Issuing Organization:Technology and Construction Court
Actores:Bank of Ireland (Governors and Company of) & Anor v Watts Group Plc
Resolution Date:October 06, 2017
 
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Case No: HT-2016-000073

Neutral Citation Number: [2017] EWHC 2472 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Rolls Building, Fetter Lane, London, EC4a1NL

Date: 6 October 2017

Before :

THE HON MR JUSTICE COULSON

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Between :

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Mr Paul Mitchell QC (instructed by Elborne Mitchell LLP) for the Claimants

Ms Jessica Stephens (instructed by RPC) for the Defendant

Hearing date: 3 October 2017

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JudgmentJudgment (No. 2 - Costs)

The Hon. Mr Justice Coulson :

  1. INTRODUCTION

  2. The claimant Bank brought professional negligence proceedings against the defendant, Watts, arising out of the failure of a development company to whom the Bank had lent money. In a Judgment dated 12 July 2017 ([2017] EWHC 1667 (TCC)), I dismissed the claim. It has been agreed that the Bank will pay Watts' costs. At the consequential hearing on 3 October 2017, there were two principal issues between the parties: the basis of the assessment of those costs, and the amount of the interim payment on account.

  3. By way of background, I note the following:

    (a) The Bank's claim failed for a variety of reasons. I found that the allegations of negligence had not been made out but that, even if they had been, it was difficult to say that they had caused any loss to the Bank. Separately, I found that the cause of the Bank's loss was its own decision to lend the money to the developer in the first place, and the failure of its employees to adhere to its lending rules.

    (b) I was particularly critical of Mr Vosser, the expert quantity surveyor who gave evidence on behalf of the Bank. My grave concerns about his evidence were summarised at paragraphs 58-70 of the original Judgment.

    (c) Before the trial, Watts made three offers to the Bank. The first was a Part 36 offer in the sum of £75,000, made on 2 October 2015. The second was in the sum of £150,000, made on 1 August 2016, also in accordance with Part 36. The third offer, dated 6 March 2017, was inclusive of costs and was for just under £545,000.

  4. ASSESSMENT ON AN INDEMNITY OR A STANDARD BASIS?

  5. As noted, the Bank accepts that it is liable to pay Watts' costs of the action. The Bank also accepts that, because of its failure to beat any of the offers, it is liable to pay interest on those costs from 23 October 2015, pursuant to CPR 36.17(3)(b). The parties agree that interest should be paid at 2% over base for the relevant period. The principal dispute between the parties concerns the basis of assessment. Watts seek an order that the costs be assessed on an indemnity basis. The Bank says that the costs should be assessed on the standard basis.

  6. It may well be that at least one of the reasons for Watts' position is the level of costs that they have incurred. Their costs budget was approved in the sum of £345,000. In addition to that, it is agreed that Watts incurred costs in respect of two additional interim applications, not included within their approved costs budget, which give rise to an additional figure of £39,424. That makes an enhanced costs budget figure of £384,424. However, it appears that Watts' actual costs are £616,000. There has been no application to amend or modify the costs budget figure.

  7. Watts' submissions in support of an order for indemnity costs rely on three main arguments. First, they say that the Bank's claim was unreasonable...

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