It is natural to help your friends and neighbours without setting out written terms and confirming everything done in writing. In this case, it cost the good neighbour substantial legal fees, time and distress for which complete vindication in court and the award of indemnity costs does not adequately compensate.
As an expert witness in a long running claim against as architect, I have witnessed what, in my experience, is one of the most vexatious and convoluted construction litigations of recent times. In 2013 an architect gratuitously assisted a couple who she knew as friends. The 'friends' fell out and sought to blame all involved, eventually resorting to claim against the architect for negligence in contract and tort.
The case was heard in 4 courts in succession. The first was in the TCC where a breach of contract claim was dismissed but a duty of care in tort was upheld. This judgement allowed that a tortious duty of care could embrace both acts of commission and of omission. At appeal, the judgement was qualified to exclude liability in tort for acts of omission.
The claim was largely based on assertions that the defendant was negligent for not doing things that were promised or which an architect ought to have done. By thus qualifying the 1st judgement, the Court of Appeal removed the basis for pursuing the claims in negligence for what the defendant did not do. Nonetheless, claims of negligent omissions were, with some rephrasing, maintained.
For example, the claimants originally said there was no fault in the defendant’s drawings but that she was negligent for not producing technical drawings. They then rephrased the claim averring the drawings were technical drawings and as such were defective in that they lacked construction details.
A similar reversal was in the budget argument. Originally the claimants denied being told the budget was £130,000 and that, had they been told this, they would not have proceeded. The first court found it evident that they were advised more than once of the budget. In response they changed the claim to be that they relied on the advice that the budget was £130,000 and that this was a negligent underestimate of cost.
The dispute returned to the TCC where the claim was dismissed after some 6 days of examining lay and expert witnesses. Cost were awarded to the defendant on the standard basis which award was appealed. Presiding over the appeal court, Lord Justice Coulson noted the claim had “echoes of the bad old days” when construction litigation “was a byword for expense and delay, and where the costs were often out of all proportion to the sums at stake”. On 6 February 2020, the Court of Appeal handed down its judgment in favour of the architect, concluding that the architect ought to be awarded indemnity costs because (i) the claimants advanced speculative/weak claims; and/or (ii) they unreasonably refused to accept a Part 36 offer which was made early in the proceedings which they subsequently failed to beat.
The effect of an order requiring payment of costs on the indemnity basis is to disapply the requirement that, in addition to costs being reasonably incurred, they should also be proportionate to the sums and issues at stake in the litigation and that, in the event of the assessment judge having a doubt as to whether or not an item of cost has been incurred reasonably, the benefit of such doubt should go to the receiving rather than the paying party.
