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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Hunt & Ors v Optima (Cambridge) Ltd & Ors [2013] EWHC 1121 (TCC) (03 May 2013) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2013/1121.html Cite as: [2013] EWHC 1121 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		3rd May 2013

 


Introduction

1. I handed down the substantive judgment on 29 April 2013. In somewhat the same way as related to the trial and that judgment, questions of costs and interest have raised numerous and complex issues about which the parties seem incapable of reaching any measure of agreement. Even following a hearing on costs which ran to over four hours, the parties have been unable to finalise a form of order based on the decisions which I communicated to them.

Interest

2. I have received written representations in relation to the basis upon which interest should be awarded in this case. So far as discretionary interest is concerned, I start from the basis that the award of such interest is intended primarily to be broadly compensatory and that it is not intended to be punitive. There is no doubt that the starting point is that generally interest is to run from the date when the loss was incurred, albeit that even this is subject to an overall discretion (see for instance Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] EWCA Civ 3).
3. I turn first to consider the period for discretionary interest against Optima. Essentially, the major part of the damages awarded relates to remedial works not yet done, such remedial works falling into two categories, the first relating to remedial works for defects which should have been put right by Optima pursuant to the "repairing" covenant under the respective leases in respect of which damages in place of specific performance has been awarded. None of this cost has yet been incurred and damages awarded reflect the remedial work costs assessed as at the first quarter of 2013. The sum of £225,142.51 (representing the reasonable and currently assessed costs of this remedial work) will be paid into a trust account and will be adjusted in terms of being topped up or paid back as the case may be when the remedial works have been carried out. This loss therefore has not yet been incurred but will be in the future. I decline therefore to allow any interest on this sum for any period.
4. A similar thought process applies in relation to the future remedial works necessary to put right defects within each of the flats in relation to those Claimants who also succeeded against Optima for breach of Clause 3.1 of the various agreements between such Claimants and Optima. There is a (frankly) convoluted and illogical argument put forward by Counsel for the Claimants that interest should run from the date on which they purchased their flats because they had a cause of action then against Optima and because in some way some at least of the Claimants should benefit from interest in the money which was rightfully theirs; an argument is floated that because there has been an increase in the remedial work cost for the First, Second, Fifth and Sixth Claimants as from 2003 or 2004 this somehow justifies an award of interest. What this argument wholly fails to take on board is the fact that the Claimants should be compensated by the cost of remedial works assessed as at the first quarter of 2013, that the award of interest from 2003 or 2004 would grossly over-compensate the Claimants and that it would effectively punish Optima. There should be no interest.
5. There are some smaller claims which have been found in favour of the Claimants such as general damages and, in the case of Mr Bedwell, for losses of £1,447.90 incurred some years ago. Interest should be allowed at the rate of 2% above base rate on those specific losses from the date when they were incurred until the date of judgment. So far as general damages are concerned, interest should run at such a rate from the middle point between the time when each of the Claimants purchased their property and the date of judgment.
6. The position is different in relation to S&P because the loss is assessed on a capital diminution basis as at the date when each Claimant purchased. The logic is that each purchased a flat which by reason of the defects for which S&P is liable was worth significantly less than they paid for it. So, for example, Mr Hunt paid some £53,000 more than his flat was worth. He has therefore had to pay mortgage interest on £53,000 which he would not have had to pay if he had purchased it for £53,000 less; alternatively, he has not been able to invest that amount and has lost the investment opportunity. Of course, the Court does not know what mortgage he had in place or what investments he might have made (and with what success).
7. Counsel for S&P accepts in effect that S&P should pay interest but puts forward various arguments as to the rate and the period and ultimately proposes a rate of interest at 1.5% above base rate for half the period between the date of purchase and late January 2013 when the Claimants' quantum expert report was served. I will deal with her points separately:

(a) She argues that the rate should reflect the fact that the diminution as found gives the Claimant more than they would have recovered if damages had been assessed on a cost of repairs basis. This is not a good point because(i) in relative terms, the large part of the capital diminution relating as it does to the acoustic and floor deflection problems does not reflect the true cost of repairs at all, and (ii) the fact of the matter is that the Claimants each spent more purchasing their properties than they were worth and their loss (however it was calculated) accrued when they purchased the properties.

(b) She says that the general damages awarded to the Claimants against Optima in some way would provide an element of double recovery. This is a "de minimis" point given the very modest amount of general damages awarded. It is in any event a bad point because the general damages are compensating the Claimants for the inconvenience and aggravation largely caused by Optima and not for having paid too much for their properties in the first place.

(c) Next, it is said that, if the Claimants spend their damages (payable by S&P) in repairing their properties, the flats will be in a better condition than they would have been had the works been carried out in the first place. This is to confuse the basis upon which the damages have been awarded against the two sets of defendants. It is undoubtedly the position in any event that the capital diminution reflecting the problems with the acoustics and the floors does not compensate them directly or adequately for the whole cost of putting right those problems. Again the argument runs into the brick wall that the Claimants overpaid for their properties from the start.

(d) Finally, she argues that it is artificial to characterise the Claimants as having suffered loss from the date of purchase. That is also an unsustainable point because the capital diminution, which was the basis of damages assessment accepted as appropriate by all parties in this litigation in relation to S&P, reflects the fact that each of the Claimants paid more for their properties than they should or would have done if the defects for which S&P is liable were not present.

8. Before turning to the appropriate rate and finalising my views on the appropriate period, it is necessary to consider the observations of Mr Justice Jackson (as he then was) in Claymore Services Ltd v Nautilus Properties Ltd [2007] EWHC 805 (TCC) where, at Paragraph 55, he summarised three propositions relating to the impact of the delay on the period over which interest should be ordered:

"(1) Where a claimant has delayed unreasonably in commencing or prosecuting proceedings, the court may exercise its discretion either to disallow interest for a period or to reduce the rate of interest.

(2) In exercising that discretion the court must take a realistic view of delay. In the case of business disputes, litigation is for all parties an unwelcome distraction from their proper business. It is not reasonable to expect any party to take every litigious step at the first possible moment, or to concentrate on litigation to the exclusion of all else. Delay should only be characterised as unreasonable for present purposes when, after making due allowance for the circumstances, it can be seen that the claimant has neglected or declined to pursue his claim for a significant period.

(3) When determining what disallowance or reduction of interest should be made to mark a period of unreasonable delay, the court should bear in mind that the defendant has had the use of the money during that period of delay."

9. A number of points are made primarily relating to the conduct of the proceedings from March 2010 when they were issued in the County Court and in effect the late, unparticularised and changing nature of the quantum claim being put forward by the Claimants. No real criticism seems to be made (and justifiably so) to the effect that the Claimants should be criticised for failing to issue their proceedings until March 2010. I do not consider that the Claimants were responsible in reality for the trial taking place when it did. Initially, the County Court ordered a 10 month delay so that the pre-action protocol could be followed; an extension for service of the Particulars of Claim was given and then throughout much of 2011 much of the time was spent in effect by agreement by the parties trying to settle the case. Thereafter directions were given in the Peterborough County Court dated 21 December 2011 which laid down a timetable. Particulars of Claim were then served and the First Defendant was late in serving its Defence. A consent order was made in April 2012 but no trial date was fixed. On 19 June 2012 a consent order was issued by which the proceedings were transferred to the High Court (the TCC). Directions were given on 9 July 2012 whereby the trial was fixed for 18 February 2013. Although further directions were given, that trial date was maintained.
10. The Amended Particulars of Claim were served on 2 November 2012 which was a few weeks later than had been previously catered for but this change was a result of the opening up works not taking place until the period from 28 September to 5 October 2012, rendering the initial service date of 28 September 2012 impossible to achieve. This was supported by a relatively detailed Scott Schedule which provided, in my judgment, sufficiently clear information for the Defendants to understand what the case being made against each of them was both as to liability and as the quantum.
11. The arguments that the period over which interest should be ordered should be reduced to reflect alleged inadequacies in the particulars provided, at least until the various expert reports were served, does not take cognizance of the fact that the trial was not at all delayed and the Defendants felt able to live with the trial date fixed by the Court.
12. In my judgment therefore I do not consider that it is appropriate, desirable or necessary to reduce the period of interest to reflect these factors. I consider that the appropriate period is from the time that the loss was incurred because this is the period over which the Claimants have suffered and continue to suffer the inherent loss of having purchased their flats at an excessive price (albeit unknown to them at the time). There is no criticism of them for having delayed the institution of the proceedings until March 2010 and any proper analysis of the actual procedural timetable does not identify that the Claimants were culpably responsible for any delay in that timetable.
13. So far as the rate is concerned, it is pointed out that the base rates were, compared with the past few years, high. On the other hand, the level of base rates is a benchmark (even if inexact) not only for the mortgage lending rates but also for savings rates. Of course, although house values have in parts of the country dropped since about 2008, it is well known that until then that they had been going steadily upwards.
14. I have formed the view that an appropriate rate of interest is 2% above base rate. Although historically a rate of base rate +1% was often used as the norm, the reality is that because the base rate is so low and has been for a number of years (at one half percent) borrowing costs are significantly higher than this and, indeed it has for many years been the case that they were invariably higher than base rate +1%. Currently, deposit rates on notice accounts equate to bank rate +2%. Mr Oram suggests 2% above base rate, Ms Powell suggests 1½% and Mr Webb suggests 4%. I have to say that Mr Webb's figure is grossly optimistic, particularly in the absence of any evidence from his clients as to their borrowing rates.
15. Therefore, in relation to the judgment against S&P, interest should run on a simple basis at bank rate +2% from the date of completion of each flat purchase until the date of judgement. The parties' Counsel, having been made aware of the above in draft, have agreed arithmetically on how much interest is payable as a result.

Costs

16. There is no doubt that the Claimants have succeeded and in principle they are entitled to their costs, subject to any arguments which may undermine what would otherwise be their entitlement to 100% of their standard costs.
17. S&P argues that the Claimants should only have two thirds of their costs up to the first day of the trial and there be no order as to costs thereafter; this takes into account, so it is argued, the substantial reduction in the amount of damages awarded compared with what was claimed, the allegedly late and inadequate quantum information provided and the various settlement offers and approaches that were made (obviously unknown to the Court until after the draft judgment on liability was given to Counsel); Counsel also relies on the fact that the level of costs claimed substantially exceeds the approved costs estimate. Optima argues that it should pay the Claimants' costs on a standard basis up to 31 August 2012 with no order for costs thereafter, or alternatively 60% of the Claimants' costs on a standard basis.
18. Counsel for the both Defendants have variously seen fit to refer to "without prejudice" correspondence and as to what was said during a mediation. This arose, I accept, from a genuine (and not improper) misunderstanding as to whether the Claimant's Counsel had agreed to this course of action; there had been no such agreement. Whilst of course the Court can and should consider Part 36 offers or indeed relevant offers which are made "without prejudice as to costs", it is generally wrong in principle for the Court either to be referred to or to take into account other privileged and without prejudice discussions. Simply because a case has reached judgment does not mean that the cloak of "without prejudice" privilege is to be considered as lifted. There was here a mediation apparently on 15 January 2013, albeit that it appears there were further communications to and from the mediator until early February 2013; it is not suggested in some way that this mediation was carried out on a "without prejudice save as to costs" basis, namely one which would allow any party without the agreement of the others to refer to the substance of what was said, offered or rejected. In the usual way, the mediation was carried out on an unqualified without prejudice basis and indeed it would be highly desirable that each of the parties attending and their representatives could say or do what they thought fit without the threat or the fear that that their reasonable or arguably unreasonable approach in the mediation would all be disclosed in the later proceedings. It is simply unacceptable and more importantly inadmissible for any party to refer to what was said, done or offered in the mediation. Given the importance of mediation, it would be contrary to policy let alone fairness for the privileged nature of or the substance of what was said to have the privilege cloak lifted at a later stage. The same thought process must apply also to other without prejudice offers or discussions, save in so far as it is clearly established that they were made or promoted on a "without prejudice save as to costs" basis. S&P's Counsel has withdrawn any initial reliance on what was said or not said during the mediation and both Counsel orally withdrew reliance on without prejudice material.
19. I now set out the history relating to admissible offers which were made prior to the commencement of the trial:

i. On 8 August 2012, the Claimants' solicitors made a "without prejudice save as to costs" offer to Optima which involved Optima purchasing the flats back at the prices paid by the Claimants, £4,000 each for legal costs on sale and purchase, £9,000 paid for moving costs, £26,000 for stamp duty and costs of £180,000. The offer called for exchange of contracts by 23 August 2012, completion by 12 October 2012 and for the provision of security pending completion.

ii. Optima replied the following day saying that settlement by reference to the purchase price of the properties was incorrect in law.

iii. On 10 August 2012, Optima made what it called a Part 36 offer ("Optima's Offer") by which it would purchase the six flats at the open market value as at that date plus £5,000 to each of the Claimants in addition to the agreed purchase price. The open market value was to be determined as the average of three valuations, with the Claimants appointing two valuers and Optima one. In addition it would pay £3,000 per flat for legal costs of sale and purchase, £1,500 per flat for moving costs and £26,000 for stamp duty; exchange was proposed by 10 September 2012 with completion by 10 December 2012. In effect costs were offered also to be assessed if not agreed.

iv. That was responded to on the same day by the Claimants' solicitors. The Claimants were not willing to accept a valuation as at August 2012 but did accept the sums offered for legal costs on sale and purchase, moving expenses and stamp duty; they wished to have a fixed sum for costs. They required completion by 12 October 2012 and exchange by 10 September 2012; on this basis no security was required.

v. There was an exchange of e-mails about the possible provision of security by Optima in late August prior to a meeting between all three parties on 30 August 2012 On 31 August 2012, S&P's then solicitors wrote "without prejudice save as to costs" not actually offering anything on behalf of S&P but encouraging the Claimants to accept settlement on the basis of re-purchase by Optima because it was their view that this would "put your clients in the position that they would have been in but for any poor construction and the offer to compensate incorporate your clients' costs". This confused the Claimants' solicitors who inquired on the same day whether Optima's offer was a joint offer; the reply was that the offer was made by Optima "in full and final settlement of all of your clients' causes of action against the defendants". On 5 September 2012, the Claimants' solicitors replied asking what would happen about S&P's costs and if Optima defaulted. S&P's solicitors replied by e-mail on 6 September 2012 that their clients would pay their own costs but would not contribute to a settlement "which pays to the claimants anything other than the current market value of the flats" and that Optima should provide security.

vi. On 12 September 2012, the Claimants' solicitors wrote to the other parties saying that Optima's Offer was not on analysis a Part 36 offer. They offered to settle on the basis of re-purchase by Optima at 10% less than the original purchase prices, exchange by 5 October 2012, completion by 10 December 2012 and with £53,000 to be paid for moving expenses, legal costs for sale and purchase and stamp duty. In addition £162,000 including VAT was to be paid for costs.

vii. On 19 September 2013, Optima withdrew its offer.

viii. Nothing material happened in relation to offers (at least in relation to such offers as can be considered by the Court) until 4 February 2013 when S&P's solicitors wrote with the concurrence of Optima's solicitors offering to settle on the basis of re-purchase by Optima at purchase prices of 12.5% less than the original purchase prices, with the payment of £5,000 for each flat for compensation and £53,000 for removal costs, legal costs of sale and purchase and stamp duty. Additionally S&P would pay £250,000 for costs to the Claimant. The offer purported to be a Calderbank offer. I will call this the "4 February Offer".

ix. On Wednesday, 13 February 2013, S&P made five separate offers purportedly pursuant to Part 36 to each of the First, Second, Third, Fourth, Sixth, Seventh and Eight Claimants. A further offer was made to the Fifth Claimant on Thursday, 14 February 2013. By those offers, S&P offered £81,700 to Mr Hunt, £45,600 to Mr Bedwell, £60,500 to Mr and Mrs Sahi, £49,500 to Ms Ransome, £15,000 to Ms Wyatt and £58,500 to Mr and Mrs Peace. These offers ("The 13 February 2013 Offers") were inclusive of interest and by implication at least offered to pay the Claimants' costs.

x. The trial started on the following Monday and the 4 and 13 February Offers were not accepted.

20. In the result, of the offers made on 13 and 14 February 2013, two were beaten and four were not beaten:

Name	Offer	Judgment Value + interest
Ms Ransome	£49,500	£76,714 (+£24,000)
Ms Wyatt	£15,000	£41,547 (+£26,000)
Mr and Mrs Sahi	£60,500	£58,630.38 (- £1,869.62)
Mr Hunt	£81,700	£76,326 (-£5,373)
Mr Bedwell	£45,600	£43,056 (-£2,543)
Mr and Mrs Peace	£58,500	£56,458 (-£2,041)

21. It is necessary for the Court to consider and to take into account the various Offers which have been made. The Optima Offer did not as such relate to the money claim which was made against it because the original claim before amendment sought damages relating to the costs of the remedial works and, to the extent that defects were also required to be made good under the "repairing" covenant, specific performance of that covenant. What was offered in effect was a "commercial deal" whereby Optima would buy back the flats at an August 2012 valuation. In considering such an offer, I accept that the proper question to ask is: "was the offer one which all or any of the Claimants ought clearly to have accepted?" This is along the lines proposed by Mr Justice Park in Sahota and others v Sahota [2006] EWHC 344 (Ch) at Paragraph 31 of his judgment. Commercially, the Claimants were clearly attracted to the proposition that Optima should buy back but they wanted the valuation to relate to what they had paid for the flats some years before. I do not consider that the Claimants' position was unreasonable. What Optima was suggesting was that they should give up their flats with all the disruption and inconvenience which that entailed and suffer a substantial loss on their investment, given the clear evidence later offered by Mr Swinley that market prices had gone down substantially since the times of the purchases. It is clear for instance that Mr and Mrs Peace, a retired couple, had bought Flat 17 to live in. The final result of the judgment is that generally the Claimants have done very much better in proceeding to judgment against Optima: most of them have secured substantial damages awards which will put them in the position in which they would have been had Optima performed its contracts properly. Those who want to continue to live in these otherwise desirable properties will be able to do so, having had the financial compensation to enable them to have appropriate repairs carried out within their properties and having secured relief to ensure that the common parts defects are fully and adequately repaired. I therefore answer the question posed by Mr Justice Park in the negative.
22. In relation to the 4 February 2013 Offer, Counsel for Optima did not rely on this as part of his argument and Counsel for S&P whilst mentioning it does not specifically rely on it either. Similar considerations apply, in my judgment, as in the paragraph above.
23. The 13 February 2013 Offers represent the first offers made solely by S&P and it is acknowledged that they were made close to the 12th hour. A reasonable period of time must be allowed to the Claimants for them to consider whether to accept or reject those offers and indeed Counsel for S&P accepts that any costs consequences must relate to Day 2 of the trial and thereafter. She seeks to argue that in reality, based on the pleadings as they stood and the evidence then available and otherwise, that even those claimants who recovered more than the offers should not have their costs for Day 2 and beyond. In my view, these arguments are wrong:

(a) She argues that Ms Ransome only beat the offer because she won on the conservatory issue and that new evidence only emerged during the trial. However, as Counsel accepts, even without the conservatory findings, Ms Ransome would have beaten the offer by more than £2,000. The point is a bad one in any event because the pleaded case against the Defendants was predicated clearly and obviously on the conservatory being defective and part of the obligation undertaken by Optima as well as being part of the responsibility of S&P to inspect; the Scott Schedule makes that clear. I do not consider that the relatively limited additional evidence which emerged added very much; a key piece of evidence was the e-mail dated 5 September 2003 referred to in Paragraph 191 of the judgement which was not new evidence. There was existing evidence that Mr Egford had applied his mind to the conservatory at the time.

(b) Finally, Counsel argues that Ms Wyatt would not have succeeded if the late amendment made on the first day of the trial had not been allowed; thus she argues that the offer when made was one which should have been accepted. This again is a bad point. It is undermined by the fact that, even after the amendments were made, there was no new offer to reflect the amendments. In any event, the amendments were substantially clarificatory with the collateral warranty clearly alluded to in Paragraph 26 of the Amended Particulars of Claims and the duty of care relating to the inspections being alluded to in Paragraphs 26 and 27.

24. Whilst I can and do accept that any costs incurred on or after 19 February 2013 specifically and exclusively for in connection with Mr Hunt, Mr Bedwell, Mr and Mrs Sahi,and Mr and Mrs Peace should be borne by them, I consider that the Claimants overall should have their costs in relation to this period because the other Claimants (who "beat" The Offers) were entitled to proceed and had to deploy in any event their evidence and expert evidence and challenge the Defendants' evidence. For instance, Mr Peace would in all probability have been called to attest to the noise problems.
25. So far as issues relating to the particularisation of the Claimants' claim, I attach no criticism to the Claimants at least prior to the service of the Particulars of Claim, given the chronology set out in the "Interest" section of this judgment. That pleading served in February 2012, albeit not then in the Scott Schedule form which accompanied the later amended pleading, did identify all the defects pursued through to judgment; they were particularised by reference to relatively detailed expert reports of Mr Brophy and Mr Chick prepared in October and June 2011. So far as quantum is concerned, apart from some minor historical costs, it was pleaded at Paragraph 19 that further investigation was required in order to establish what work was needed to remedy the defects in the floors (deflections and acoustic) and the particulars of remedial work costs would be provided after the further investigation was carried out. Apart from the fact that the disputes between the parties were obviously TCC business, one of the reasons for the transfer, I infer at least, was that the quantum was obviously going to be reasonably substantial.
26. It is clear, and indeed I have referred to this in the main judgment, one of the problems had been that Optima either never had or had lost up to date drawings which demonstrated what had actually been built in the first place. One of the reasons for the opening and further investigations was in order to overcome this deficiency which had emerged clearly by mid-2012, as evidenced by the Claimants' solicitors' letter of 4 July 2012.
27. It was only in July 2012 that the TCC effectively assumed control over the case management and was able to fix the trial at relatively short notice for February 2013. It was clear to all concerned that at this stage a greater degree of particularisation was not only necessary but also likely. Although a significant number of the defects were within individual flats, important "common parts" defects such as the floors, foul and surface drainage would need to be investigated. Thus it was clear and accepted by all parties that there would have to be an opening up of various works by the experts. Mr Justice Ramsey at the first TCC CMC ordered that the Claimants would provide a statement of the areas which they wished to open up for inspection by 17 July 2012 with the Defendants to comment by 14 August 2012 and with the Claimant to give seven days' notice of any opening up. On 17 July 2012, the Claimant's solicitors wrote to the other parties' solicitors enclosing such a schedule together with various drawings and plans and notifying them that they proposed the opening up to start on 21 August 2012. The Defendants replied on or about 14 August 2012 with various comments but indicating that the 21 August was not convenient. The Claimants offered on 15 August 2012 to start the opening up on 3 September 2012 and on 21 August provided a more detailed timetable of the proposed opening up. There was some disagreement about the scope of the opening up. The opening up was then postponed to start on 10 September. That was not convenient to S&P's experts. The Claimants' builders who were to assist were not available the following week. Thus it was that the opening up attended by the experts in the late September 2012. I attach no blame to any of the parties for the delay in the opening up but it is clear that it was not substantially the fault of the Claimants who were clearly keen to be getting on with this operation much earlier.
28. The Amended Particulars of Claim and the Scott Schedule were served on 2 November 2012, by which time it was clear that the claim, at least nominally, had increased to £2.3 million. S&P had just changed solicitors and did not reply substantively until 21 November 2012 when they sought clarification of the Scott Schedule, albeit that little was complained about the quantum at that stage. It was only on 6 December 2012 that S&P's solicitors sought full particularisation of the quantum in the Scott Schedule. This was only provided on 3 January 2013 by the Claimants' solicitors. Although very precise figures were given in the Scott Schedule little or no breakdown of the £2.3 million claimed was provided. I was told that the reason was that much of the priced quantities breakdowns were in a draft expert's report and had been prepared by a junior associate of Mr Nutland who then needed some time to check and verify them. S&P did not appoint its quantum expert until just before Christmas 2012.
29. There then followed delay primarily on the part of the First Defendant in agreeing terms for the appointment of the single joint expert for valuation, Mr Swinley.
30. It is unfortunate, given the fact that there was less than four months to go to trial that a greater level of detail particularly relating to quantum was not provided until 3 January 2012. I do attach some criticism to the Claimants for failing to "get their act together" somewhat better than they did particularly in circumstances in which their quantum had increased dramatically and their professional team must have had at least a real understanding in mid-summer that this was likely. However, this did not delay the trial and did not prevent ultimately the respective Defendants' experts from submitting comprehensive and comprehensible reports. It was and must have been clear to the Defendants when the original Particulars of Claim were served (with accompanying expert reports) that extensive and serious defects were being put forward (for most of which one or other or both of the Defendants were found liable ultimately) and they and their experts at least had a considerable time to consider what might be appropriate remedial works. An example relates to the roofs in respect of which Optima had actually secured a quotation for total re-covering some months before. The fact that the Defendants apparently, at least in correspondence, professed concern and upset in January and February 2013 about quantification does not directly add much to the argument about costs (other than possibly in relation to the relevance of the various offers which were made), because the Defendants continued to defend the proceedings, did not seek an adjournment or a stringent or other orders from the Court in relation to any such grievances and in any event were able to mount an intelligible defence to the quantum claims as presented.
31. However, it was clear by August 2012 that the Defendants were seriously interested in settling the case. It is perhaps unsurprising that it was difficult for them to craft or quantify any offer without a clear statement as to what was being claimed financially. Although I have found that it was not unreasonable for the Claimants to reject the Optima Offer in August 2012, the negotiation was not helped by the absence of any particularisation or even indication that the claim could or would run to seven figures. The Claimants or rather their expert team could or should have been able to do better in terms of particularisation of their loss much earlier than they did.
32. One then needs to link their finally particularised quantum to what they actually recovered. They actually recovered overall, allowing for duplication and overlap, about £600,000 plus some interest, which is to be compared with the £2.3 million which they claimed. It is fair to say however that there was an alternative claim some £600,000 less reflecting a lesser remedial scheme for the acoustic and floor problems. Although Mr Nutland readily agreed in his report that in reality his assessment was closer to £1.4m (alternatively some £800,000), the eventual recovery was just over one quarter of what was claimed. There was therefore in my judgment a greater chance that this case could have settled before trial if a somewhat less optimistic approach had been adopted by or on behalf of the Claimants at an earlier stage. There is of course no certainty in that and I can not assess in probability terms what would then have happened.
33. Taking into account all of the above matters, I have formed the view that a 10% reduction in the Claimants' overall costs entitlement is appropriate and that, therefore, subject to various reserved costs orders and Paragraph 24, the Claimants should have 90% of their costs of the proceedings to be assessed on a standard basis.
34. It seems to me to be completely immaterial in determining whether in principle and in what proportion costs overall should be ordered to consider whether or not the "winning" party's costs have exceeded the approved costs estimate under the costs management powers of the Court. It can not be and has not been demonstrated that the Defendants in some way detrimentally relied upon an unapproved costs estimate submitted in July 2012 by a Claimants. That is a matter which goes to the final assessment (in this case on a standard basis) and is a matter for the Costs Judge. It may also be relevant in determining what may properly be ordered by way of an interim payment on account of costs. More than that, it is irrelevant.
35. S&P argues that the Court should "allow" only £10,000 of the profit costs of the Claimants' first solicitors (apparently quantified at £63,256.43). The solicitors were replaced in the summer of 2012 having been engaged for between two and three years; the reasons for their replacement are not clear or known to the Court. It would be quite wrong for the Court to make any such order as suggested by S&P; this is a matter which can properly be left to the Costs Judge who will doubtless be best placed to determine the extent to which this firm's bill was or is justified. The same can be said about a second point made by S&P that the Court should "disallow" the fees of Mr Winton- Smith, an expert initially retained. Again it would be quite wrong, at least on the available information, to disallow these fees, albeit that it will be open to the Costs Judge to disallow all or part of them. The Court is simply not sufficiently informed to consider whether to disallow the fees without some clear explanation available as to why this expert did not continue as the expert; for instance, if he was or became ill or latterly became conflicted in some way, it may not have been unreasonable to have retained him in the first place and later dispensed with his services. Part of these fees may on analysis be reasonable and recoverable.

Interim Payment on account of Costs

36. There was, ultimately, agreement towards the end of the costs hearing that there should be an interim payment to the Claimants of £250,000 on account of costs, with Optima and S&P each paying £125,000 within 14 days.
37. I indicated to the parties that I would provide some clarification and assistance in relation to the costs estimates. As is well known the TCC was operating costs management procedures in particular through Practice Direction 51G. The Claimants and S&P had, properly, submitted costs budgets before the first CMC in July 2012 but Optima had not. Mr Justice Ramsey ordered that Optima was to do so by 17 July 2012 and each party was to respond to the others' estimates by 31 July 2012. This happened and, I am told, that the responses and estimates were later lodged with the Court; I can find no record of this but it is in any event acknowledged that the Court was not asked to make any Costs Management Orders, which in the event were not made.
38. The Claimants' costs estimate was in the sum of £349,946 exclusive of VAT except in relation to experts fees incurred to date. It therefore equates to something just over £400,000 inclusive of VAT. The eventual costs inclusive of VAT are said to be about £600,000. A part of these costs relates to the various amendments and reserved costs, in relation to which there will be appropriate orders. A major increase is said to have been in relation to experts' costs which have gone up by about £50,000 or more above the July 2012 estimate. I am not at all surprised that the experts' costs have gone up as they were clearly much more involved as it turned out then I suspect could have been reasonably foreseen as at July 2012. In addition, I suspect strongly that Mr Swinley's fees, as the single joint evaluation expert only appointed in January 2013, were not allowed for. I suspect also that solicitors' time in relation to the various attempts at the settlement proved much greater than could reasonably have been anticipated.

Miscellaneous Matters

39. In relation to Mr Egford, who was the Third Defendant, the Claimant should pay his costs as a defendant and the costs directly attributable to him being a defendant. That would not include the costs of and occasioned by him giving evidence because inevitably S&P would have had to call him.
40. There are various other costs which need to be addressed:

(a) The costs of and occasioned by the Claimants' amendment application during the trial should be borne by the Claimants and the Defendants' consequential costs should be paid by the Claimants.

(b) The costs of and occasioned by the Claimants' applications referred to in Paragraphs 96 to 101 of the first judgment should be borne by the Claimants and the Defendants' costs relating thereto should be paid by the Claimants. The costs of and occasioned by Optima's application referred to in Paragraph 96 and 100 should be borne by Optima and the Claimants' costs relating thereto should be paid by Optima.

(c) There has been no order made in relation to the Amended Particulars of Claim served in November 2012. Apart from the production of the Scott Schedule which should be considered as costs in the case, the Claimants should pay their own costs of the amendment and pay for the Defendants' consequential costs of pleading to the Amended Particulars of Claim.

41. The Claimants' should pay the Second, Third and Fourth Defendants' costs of and occasioned by the Claimants' application issued on 6 September 2012, in respect of which that application was dismissed and the costs were reserved, the application being for an "unless order" relating to an unanswered Request for Further Information issued only on 21 August 2012. Following the exchange of written representations, on 1 October 2012, the Court issued its order to that effect, with the following reasons:

"I. This case, transferred to this Court from the Cambridge County Court, was the subject of directions given by Mr Justice Ramsey on 17 July 2012. The trial was listed for 18 February 2013. However the trial timetable required the Claimants to serve draft Amended Particulars of Claim and a draft Scott Schedule by 28 September 2012, it being clear that the existing Particulars of Claim were inadequate to set out the basis of the claims relating to defects pursued by the Claimants. There is nothing on the record to suggest that the Claimants at that stage considered that the Defence of the Second to Fourth Defendants, which was a reasonably full document, was inadequate or inadequately pleaded or particularised.

II. The Claimants' Request for Information of the Defence was served on 21 August 2012 and on its face called for a reply by 31 August 2012, which was optimistic in any event. The Request itself asks for particulars in effect relating to what was expressly certified (allegedly) by the Third Defendants. Thus, these Defendants have quoted from these certificates in Paragraph 23 and the Claimants seek to know what was meant in various quoted parts of those certificates. I doubt, without finally deciding the point, that the Request is justified because Paragraph 23 of the Defence is simply quoting from documents issued. Paragraph 23 does not involve an assertion that the contents of the certificates were true or carefully made.

III. I do not consider that it was appropriate to seek an "unless" order a few days after the arbitrarily fixed compliance date had passed. In my view there is much in what the Defendants say that it would be inappropriate to make any "unless" order either within such a short time frame, or without a hearing, or in circumstances in which the Claimants are expressly required to produce substantial and significant further pleadings.

IV. If the Claimants wish to pursue the obtaining of Further Information as requested, they may do so but they would need to issue another application and fix a 30 minute appointment. I have reserved the question of costs...."

These reasons themselves justify the award of costs. These costs should be assessed on a standard basis by the Costs Judge.

42. Optima has asked in effect for further clarification and seeks "a prior decision as to how to apportion the claim against [Optima] against" S&P. It is said that the apportionment cannot be pound for pound and, it is suggested, that in effect if execution is fully made against S&P the claims against Optima would be fully extinguished and vice versa and that in some way execution against Optima should "rateably" reduce the execution against S&P and vice versa. I have already addressed this in Paragraph 264 of the main judgment. The basis of the argument is simply wrong which can be seen simply from comparing the figures the damages against Optima and S&P:

Claimant	Against Optima	Against S&P
Mr Hunt (1st)	£84,822.83 £1,100 £2,000	£53,460
Mr Bedwell (2nd)	£60,023.14 £427 £1,850	£30,800
Mr and Mrs Sahi (3rd/4th)	£213	£51,650
Ms Ransome (5th)	£80,137.08. £550 £1,850	£52,390
Ms Wyatt (6th)	£108,141.51 £375 £1,850	£28,450
Mr and |Mrs Peace (7th/ 8th)	£573	£43,300

Bar the two married couple Claimants, the sums awarded against Optima substantially exceeds what has been awarded against S&P. Also there are some losses awarded against Optima in respect of items which are not awarded against S&P; for instance the general damages and various defects (the mansard roofs and the soffit board). Furthermore, Optima should not get the "benefit" of the percentage mark-up proposed by Mr Swinley and accepted by me (+50%) because that relates to the capital diminution purely and simply.

43. In my judgment, there should be no "rateable" reduction in relation to the "common parts" damages awarded, in lieu of specific performance, against Optima. This is because the Claimants as long leaseholders are entitled to expect that the common parts remedial works will be done by or at the expense of Optima. Indeed, there is an order of the Court requiring Optima to pay these damages into a trust account; that order must be complied with and is supportable by appropriate court sanctions. If the Claimants execute against S&P, Optima must still procure the execution of the relevant remedial works to the block of flats and that has to be done in effect by it providing the money to do such works. Assuming however that the requisite damages in lieu of specific performance are paid into the requisite trust account, then that element of the capital diminution in the damages awarded against S&P has been satisfied. I can take an example: Mr Bedwell's capital diminution damages include £7,947.00 in relation to his "contribution". Assuming that the "common parts" damages are paid by Optima, he will not recover that sum by way of execution from S&P. The same does not go the other way around however. If (and I hope in the unlikely event that) Optima does not and can not pay the "common parts" damages, then the Claimants can enforce appropriately against S&P.
44. The fact that all the "common parts" remedial works might go to reduce the capital diminution as it exists judged by 2013 property values does not in itself have an effect on execution. The damages awarded against S&P relate to in effect the overpayment made related to the true value of the properties when purchased, taking into account that they were riddled with defects. It is impossible to speculate what any of the Claimants would have done if their properties had actually been worth what they paid for them. They have in a real sense been "lumbered" with properties which were seriously defective and in respect of which the developer landlord was not really prepared to engage properly. They lost the opportunity by reason of the defects at least to dispose of their properties at a time when housing prices had gone up (at least until about 2008) and they are now in a time when property prices have gone down.
45. At the costs hearing, the above was debated with little contribution from Counsel for S&P. There was some genuine misunderstanding on her part at that stage as to whether the uplift was in any event to be borne by S&P. However, she has since the hearing sent in written submissions saying that if the common parts damages are paid by Optima the 50% uplift relating to the capital diminution should not have to be paid on execution by S&P. I disagree because the compensation for the Claimants' purchase of the property relates back to the time of their purchase and they will simply not be compensated for that if only the remedial work cost is in effect paid for by Optima; they will not be compensated for the additional loss in the capital diminution over and above the cost of remedial work.
46. She then goes on to argue that the Order on judgment should recognise as she argues that the "effect of the Claimants merging the award for (i) acoustic/floors and (ii) other individual defects is, in effect, to transfer the benefit of the Swinley "uplift" in relation to the acoustic/floors to the award in relation to the other individual defects, to the benefit of" Optima. I had decided at the costs hearing simply that the order should give judgment in relation to the "common parts" defects against Optima in the sum of £225,142.51 and against S&P for the respective sums of £7,947 and £10,331.08 (attributable to the 1/20 or 1/26 share of the Service Charge) and judgment for the balances as found against S&P and Optima. There are too many theoretical and convoluted arguments as to what might happen on execution. I have attempted above and in the main judgment to provide some clarification and help to the parties. Common sense might suggest that the parties try to agree how execution is to be levied and as to who is to pay what and in what amount but that seems to have been lacking in the past. I do not think that it is appropriate for the Court to anticipate the perhaps many permutations which enforced execution might take. I have therefore given liberty to the parties to apply in the event that difficulties arise. I very much hope that the Court's time will not be wasted by unnecessary applications in this regard. I would strongly urge the parties, even after the 12th hour in this case to co-operate to secure an orderly enforcement of the judgments.

Permission to Appeal

47. S&P has sought permission to appeal against the first judgment on four grounds. I have already indicated that permission is refused for the following brief reasons:

(i) It is not reasonably arguable that there was no collateral contract between the first six Claimants and S&P. The wording was reasonably clear and authorities in relation to the effectiveness of consideration passing in this case to Optima are well-established.

(ii) It is not reasonably arguable that no duty of care was owed to the Claimants in relation to the performance of the professional services referred to on the face of the Certificates. This is a matter of logic and is in any event broadly covered for instance by the victor of Lord Templeman in Smith v Bush.

(iii) It is not reasonably arguable that there was no reliance. This was largely a matter of fact.

(iv) It is not reasonably arguable that Section 14A of the Limitation Act not apply on the facts to Ms Wyatt's claim. It is unrealistic to proceed on the basis that merely because a small percentage of the defects were known about earlier by her that Section 14A can not be deployed in relation to the more serious defects which she could not reasonably be expected to have known about as justifying any cause of action against S&P.