Burchell, a small builder, entered into a contract to build two extensions to the home of Mr and Mrs Bullard in Bournemouth. The contract provided for four stage payments. Burchell submitted his claim for the third stage payment, but the Bullards refused to pay alleging that some of Burchell’s work was defective.
Burchell then instructed solicitors, who wrote to the Bullards suggesting that the dispute be referred for alternate dispute resolution through a qualified mediator in order to avoid litigation. The Bullards’ chartered building surveyor responded to the solicitor’ s letter, and stated that mediation was not an appropriate route to settle matters as the matters complained of were technically complex.
Burchell subsequently brought proceedings against Bullards, who in turn made a counterclaim against Burchell. The judge gave judgement for Burchell on the claim and gave judgement for the Bullards on part of the counterclaim, which he found to be grossly exaggerated. Part of the counterclaim related to the roof of the house that had been built by a subcontractor, and Burchell joined the subcontractor to the proceedings.
Allowing for VAT and interest the result was that the judge ordered the Bullards to pay to Burchell the difference between the two amounts, which was £5025. Costs of the whole litigation were in the region of £185,000, and the judge ordered that the party’s pay each other costs.
Burchell appealed against the order on costs. Burchell submitted that the judge should have awarded him his costs not only of the claim but also of the counterclaim, or at least his costs of the counterclaim in so far as it related to the issue of the roof, with no order as to the costs of the rest of the counterclaim.
Burchell was successful in his appeal. The judge had erred in his treatment of costs. The circumstances of the case justified a departure from the general rule that costs should follow the event. The conduct of the parties and the issue of the limited success of the Bullards’ exaggerated counterclaim became relevant. The Court of Appeal considered these factors and discharged the lower court’s orders for costs. The Bullards were ordered to pay 60% of the costs of the claim, counterclaim and also 60% of Burchell’s liability to pay the subcontractor who was joined to the proceedings.
*Full case details
Mr Burchell vs (1) Mr Bullard (2) Mrs Bullard & Ors*, 8 April 2005, Court of Appeal, Civil Division, Lord Justice Ward and Lord Justice Rix
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The Court of Appeal stated that refusing to mediate before proceedings were issued on grounds of complexity was “plain nonsense”. The courts have approved the use of mediation running in parallel with the court system to resolve disputes. It is clear that parties cannot ignore a request to mediate before the issue of proceedings and to do so may incur severe costs sanctions.
Reflecting on the very limited success of the Bullards’ exaggerated counterclaim, the Court of Appeal also issued a general caution against the “kitchen sink” approach to litigation, stating that there are considerable perils in adding to a good case other aspects or items of dubious merit.