Paul Thomas Construction Ltd v Damian Hyland and Jackie Power (2000) TCC

© Daniel Atkinson 2002      12 October 2002        

In Paul Thomas Construction Limited v Damian Hyland and Jackie Power (2000) TCC Judge Wilcox had stated at a hearing in which applications by Paul Thomas Construction had been dismissed, that he required justification of the conduct of Paul Thomas Construction in issuing proceedings as he considered that it might not be appropriate. He heard the issue at a further adjourned hearing.

When the relationship of the parties broke down in early December 1999 and a final account was delivered, Hyland and Power not unreasonably sought further particularisation of the account then served. Early in December 1999 Hyland and Power appointed a quantity surveyor to assist in the valuation. Adjudication was discussed but the 1996 Act did not apply as Hyland and Power were residential occupiers. Nonetheless Hyland and Power were willing to accept the named person either as mediator or adjudicator. Paul Thomas Construction took the position that unless there was an undertaking as to his costs by Hyland and Power, they would not agree to his appointment.

In January 2000 Paul Thomas Construction made a demand for payment of £42,000 of the total of £76,000. If payment was made then Paul Thomas Construction indicated it would be prepared to talk. If payment was not made then Paul Thomas Construction indicated it would commence legal proceedings. Judge Wilcox observed that Paul Thomas Construction had adopted a heavy-handed approach. It is very much at odds with the TCC ethos that ran through the CPR. The protocol was not in force at that stage, and therefore it played no part in the decision, although it must have been known to the parties that negotiations were under foot and consultations were under way as to its import. But, in any event, the CPR pre-action protocol did apply and the strong imperative put upon both parties to negotiate, to be frank in disclosing documentation and to talk and discuss was upon them.

Hyland and Power reminded Paul Thomas Construction of their duty in relation to the protocol practice direction, and in particular paragraph 4 of the protocol. Judge Wilcox observed that it had no effect upon restraining the keenness and aggressive stance that was adopted by Paul Thomas Construction.

Judge Wilcox held that the conduct of Paul Thomas Construction was exceedingly heavy-handed. They had been uncooperative and were clearly in breach of the protocol practice direction and in particular paragraph 4. Judge Wilcox then considered how should their conduct be characterised. He examined when the measure of costs awarded would be on the more favourable basis of "indemnity costs" and decided that culpability meant wholly unreasonable behaviour. He held that the behaviour must be measured against the reasonable conduct of reasonable solicitors at the time and must be informed by the current rules and, in particular, paragraph 4 of the pre- action protocol. He held that it was wholly unnecessary to commence this litigation. It was wholly unreasonable. It was clear that there could have been and should have been explored alternative dispute resolution. That may include sensible discussions between the parties not necessarily involving a third party. There was in those terms some culpability in this case. He held that indemnity costs were warranted.

Accordingly Judge Wilcox ordered assessment of costs to be made on an indemnity basis making allowance for the costs that would have been incurred in mediation.