Bellway Homes Limited v Seymour )Civil Engineering Contractors) Limited [2013] EWHC 1890 (TCC)

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The Court was asked to resolve the issue of costs between the parties, following the settlement of proceedings at the 11th hour before trial. The proceedings concerned a claim for repayment of a sum of £513,000 in prolongation and increased costs, which had been paid pursuant to an adjudicator’s decision. The claimant finally settled for £146,953 after having paid a sum marginally greater than that to the defendant by way of the release of retention monies which had become payable part way through the proceedings. In deciding which party should be liable for costs, the Court took careful consideration of (i) the terms of the final settlement, (ii) Part 36 and other offers made by the parties, (iii) each party’s approach to negotiations and (iv) the general conduct of the litigation. It divided the proceedings into different periods and awarded costs separately in respect of each period. The Court also held that the claimant’s entitlement to costs should be reduced, given its inference from the settlement (which in effect granted the claimant 26% to 27% of its claim) that the claimant had substantially exaggerated the amount of its claim.

Technology and Construction Court, Mr Justice Akenhead


Bellway Homes Limited (“Bellway”) engaged Seymour (Civil Engineering Contractors) Limited (“Seymour”) to carry out the construction of a road. The agreed contract sum was £3,724,267.50. The Works were carried out between 20 August 2007 and 18 December 2008, that being 31½ weeks later than had been agreed. A dispute arose between the parties and adjudication was commenced.

In June 2010 an award comprising £1,045,358.04 was granted in favour of Seymour. Bellway complied with the decision and paid the full amount but informed Seymour of its intention to commence court proceedings to recover part of what it had paid pursuant to the adjudication award, particularly the prolongation costs totalling £401,103.39. Thereafter, the parties implemented the Pre-Action Protocol. In its Letter of Claim, dated 16 November 2010, Bellway indicated that the value of its claim totalled £518.060.03.

In June 2011, Seymour sought the release of the second half of retention money in the sum of £146,955.07 plus VAT given that completion had been achieved on 18 December 2008, the 30-month defects liability period expired on 17 June 2011 and the second half of the retention money would become due for payment on or by 1 July 2011. Bellway withheld payment of the whole of the retention money on the grounds of (a) the substantial number of defects that remained unresolved the cost of remedying which would exceed the amount of the retention and (b) Bellway’s intended claim for the recovery of certain of the sums which had been paid pursuant to the adjudication award.

Subsequently, proceedings were issued and, on 27 March 2012, Bellway’s solicitors served its Claim Form and Particulars of Claim, in which Bellway claimed back £513,669.76 in prolongation and increased costs. In May 2012, Seymour served a defence and counterclaim, which included a claim for the release of the second half of the retention money.

By September 2012, most of the outstanding defects in the works had been resolved.

On October 18 2012, Seymour made a Part 36 offer, whereby Bellway would pay (i) a sum of £1 in full and final settlement of all claims and counterclaims, and (ii) all costs incurred by Seymour up to the date on which the notice of acceptance is served. Bellway rejected the offer.

In January 2013, Bellway paid the retention money to Seymour and sent a Part 36 Offer offering to settle the whole claim for £225,000 plus standard costs, which acknowledged that the retention money of £146,995 was being released separately. Matters continued to proceed towards trial and in April 2013 Seymour restated that its earlier offer of 18 October 2012 remained open for acceptance. They claimed to be mindful of the costs (at this stage Bellway’s costs estimate was £715,665.77 and Seymour’s stood at £621,267.61) and urged the parties to use best endeavours to reach a settlement. On 10 May 2013, Bellway’s solicitors wrote offering to settle at £158,631 and that Seymour should pay Bellway its costs on a standard basis of the claim and Bellway would pay Seymour’s costs of the claim for the retention. On 28 May 2013, Seymour offered to settle for £130,000 with costs to be reserved to the trial judge. On 4 June 2013, Bellway repeated their offer of £158,631 but on the basis that costs were to be left to the trial judge. The parties finally settled for an amount of £146,953 in June 2013 with costs to be left to the trial judge together with interest since October 2012. Agreement was subsequently reached on interest.


The Court was asked to decide who should bear the costs.


In order to analyse the state of account between the parties and the position on costs, the Court divided the proceedings into four distinct time periods, namely:

  • July 2010 to September 2012, when a net sum was due to Bellway in respect of its claim for repayment of money paid out as a result of the adjudication, although that sum was reducing as the defects were being remedied by Seymour;
  • September 2012 to 18 October 2012, when the bulk of the defects had been put right and there was a net sum, albeit only for £1 or £2 due to Seymour;
  • 18 October 2012 to the end of January 2013, when the retention money was released, such period being marked by reluctance on the part of Bellway to accept that its claim was worth more or less the same as the value of the retention and on the part of Seymour to indicate that it might be prepared to accept some responsibility for its own and Bellway’s costs before the 18 October 2012 offer;
  • End of January 2013 to the final settlement in June 2013, when in effect Bellway was in credit because it no longer owed the retention money and if the matter had gone to trial and judgment had been in effect for the settlement sum, Bellway would have been the net winner. However, this period was marked by a reluctance of either party to engage constructively as to settlement on anything other than its own terms.

On this basis, the Court held that:

  • Seymour should pay Bellway’s costs on a standard basis up to and including 30 September 2012. However, this should be limited to 50% of such costs since Bellway had probably substantially exaggerated the amount of its claim, as could be inferred from the amount for which it settled, and it could properly be said that Bellway had pursued a claim for £513,000 knowing that it would end up with less and could well end up with a lot less;
  • Bellway should pay Seymour’s costs from 30 September 2012 up to 31 January 2013 because Bellway was not entitled to anything at that point by reason of its continued and unjustified withholding of the retention and also because it was unwilling effectively to engage in a settlement process which reflected settlement of its claim at a level which was actually or virtually equivalent to the amount of the retention money; and
  • Each party should pay its own costs thereafter to reflect the “almost complete pointlessness of the litigation proceeding” given that in reality there was little between the parties as to the settlement figure excluding the costs and that costs way over the probable true value of the claim were being expended during this period.

This summary was provided by CMS Cameron McKenna LLP.

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