The Court of Appeal recently gave judgment in Nelson’s Yard Management Co v Eziefula [2013] EWCA Civ 235, a case concerning whether the defendant should bear the costs of an aborted application for an injunction for breach of the Party Wall etc. Act 1996.
Background
Nelson’s Yard Management Company (“Nelson’s”) is the freehold owner of 1 – 10 Nelson’s Yard, Camden. The Defendant, Mr Eziefula is the freehold owner of adjoining premises, 11 and 13 Camden High Street.
In January 2007 Mr Eziefula began excavating within 1 metre of the rear wall of Nelson’s property. Prior to doing so Mr Eziefula failed to serve the required notices under section 6 of the Party Wall Act.
[pullquote_right]Mr Eziefula’s had failed to respond to any of their pre-action correspondence, or set out his position. This was unreasonable conduct…[/pullquote_right]
Between 18 May and 13 July 2007 Nelson’s and their solicitors sent 4 letters to Mr Eziefula pointing out that the works were in breach of the Party Wall Act, and requesting that their surveyor be allowed to inspect the foundations. Mr Eziefula later accepted that he received those letters but did not reply to them.
Nelson’s and the other Claimants issued proceedings in January 2008 seeking an injunction stopping the works until an award had been agreed, and and order that their surveyor be allowed to inspect the foundations. Shortly after the parties agreed to stay to enable negotiations to take place.
Eventually Mr Eziefula agreed to allow Nelson’s surveyor to inspect, and in August 2008 served a party structure notice. An award was issued in February 2009, which required Mr Eziefula to pay a modest sum as damages for damage to Nelson’s foundations.
In March 2012, having got what they were after (a surveyors inspection and an award), Nelson’s discontinued their claim.
The Law
The usual rule under CPR 38.6(1) is that a claimant that discontinues their claim should pay the defendant’s costs. This is however only the usual rule, and in appropriate cases the Court may make a different order.
In this case Nelson’s applied for an order that Mr Eziefula pay their costs on the basis of Mr Eziefula’s alleged obstructive and truculent behaviour throughout the dispute and the subsequent proceedings.
The Decision
The Court of Appeal though that Nelson’s was justified in issuing proceedings, as Mr Eziefula’s had failed to respond to any of their pre-action correspondence, or set out his position. This was unreasonable conduct, and justified a departure from the usual rule above.
However, once Mr Eziefula had filed his defence he had responded and set out his position. If Nelson thought the the position was misconceived they could have applied to strike out the defence.
The Court therefore ordered Mr Eziefula to pay Nelson’s costs up to the filing of his defence, and thereafter each party had to pay their own costs.
Comment
The result of this case is unsurprising, and underlines the importance of taking expert advice early on is dispute. Had Mr Eziefula responded adequately, or at all, he might have avoided liability for some of those costs.
This also provides some comfort to adjoining owners that, if they have to pursue an injunction, they are likely to recover at least a large portion of their legal costs.