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The Court recently reminded parties of its discretion in respect of Costs and refused to make a Costs Order in circumstances where all other matters had been disposed of by consent between the parties.

The parties entered into a Building Contract valued in excess of £4M, with a term in the Contract that the Claimant would procure an On Demand Bond, an uncommon feature in a domestic Contract. The Claimant purchased the Bond but subsequently issues arose regarding the release of the Bond centring on whether practical completion had been achieved.

The Claimant issued proceedings seeking an Injunction to prevent a call on the Bond and a Mandatory Order that the Defendants write to the bank saying that they would place no further reliance upon it.

The Claimant obtained a limited Injunction and the parties subsequently settled the dispute. The Consent Order included a provision giving the parties liberty to apply if they were unable to agree costs. Needless to say, no agreement was reached and the Claimant applied for its costs of the proceedings on the basis that it had been the successful party i.e. it had obtained a limited Injunction, and therefore the usual Costs Order should follow.

The Judge refused to make the usual Order and noted that, if parties settle all issues except costs, there is authority that they take the risk that the Court will not be prepared to make any determination other than there be no Order as to costs.

The Judge was not satisfied that it had been reasonable to seek the Injunction without giving the Defendants even a short time to confirm that they would not call on the Bond. The Judge suggested that only a short period would have been sufficient and further that although there was concern, the Claimant had taken 2 months to make a Without Notice Application for the Injunction. In the circumstances, no Order as to Costs was the result.

This is a lesson for both practitioners and parties to an action to ensure that the issue of costs is addressed in any compromise or settlement. Additionally, it is a warning that when seeking an injunction a Claimant should give consideration to providing the Defendants at least some opportunity to deal with the issues before commencing an Application; and that when commencing an Application time is crucial and any delay will have a potentially negative impact on the outcome.

For more information on dispute resolution please contact our Dispute Resolution team on 01244 354800 or 0151 321 0000.

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