The claimant, Mr Dearling, had alleged that the house that the defendant had contracted to build for him had not been constructed in accordance with their contract. An initial application to court was settled on the basis that an expert be appointed to determine the dispute ("the ADR proceedings"). The expert allowed some, but not all, of the claimant's claims, and decided that the cost of the ADR proceedings should be split 50/50 between the parties. The claimant subsequently issued further proceedings claiming damages for breach of contract, but when the matter came to trial, the judge again encouraged the parties to attempt to settle the matter. The parties duly settled, but left the matter of costs to the judge, who ordered that the defendant should pay all the claimant's costs apart from its half share of the costs of the ADR proceedings.
The defendant appealed on the basis that the judge should not have allowed the claimant its costs after the last date on which the defendant's final Part 36 offer could have been accepted, and the claimant cross-appealed on the basis that the judge should have awarded him his costs of the ADR proceedings.