Fitzpatrick Contractors Ltd v Tyco Fire and Integrated Solutions (UK) Ltd [2009] EWHC 274 (TCC)

Posted on Friday, February 20th, 2009

This was a matter where the most significant issue was whether costs should be assessed on the indemnity or standard basis. The other issues were related to the payment of interest and the making of an interim payment.

On 24/01/08, the Claimant made a Part 36 offer to the Defendant in the sum of £10,250,000. The period for acceptance expired on 14/02/08. However, the offer was not accepted by the Defendant and the matter proceeded to trial which was to take place in April 2009.

The Defendant accepted the Claimant’s offer on 14/01/09. The Claimant maintained that the costs of the action from 14/02/08 should be paid by the Defendant and assessed on the indemnity basis. However, the Defendant argued that these costs should be assessed on the standard basis if not agreed. The Defendant referred to Excelsior Commercial and Industrial Holdings Limited v Salisbury Hammer Aspden and Johnson (a firm) [2002] EWCA Civ 879 and argued that unless it considers it unjust to do so, the Court should make an order for costs on the standard basis.

The Claimant contended that had there been a trial then the Claimant would have been entitled to indemnity costs and that the Defendant’s conduct in general warranted an order for indemnity costs.

Mr Justice Coulson held that costs should be awarded on the standard basis. This was not an appropriate case for indemnity costs as the Defendant’s conduct was not so unreasonable. Although they accepted the offer outside the 21 day period, this was permitted by CPR. Interest was to be paid at 1% above the base rate, in line with authorities referred to by Mr Justice Coulson, after 14/02/08 and the Defendant was to make an interim payment on account for £937,500. The interim payment was limited to this amount due to the Claimant estimating costs to trial of over £2 million but then claiming around £3.7 million costs as of 14/01/09.

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