The Court of Appeal has set aside a costs order that left Shane and Antoinette O’Reilly facing a potentially significant liability to the contractor after they succeeded in a dispute over defects in their Saggart home.
In a judgment delivered on 31 July 2020, the court allowed the homeowners’ appeal against the High Court costs order. It substituted an order awarding them the costs of the High Court proceedings, including any reserved costs. If the parties cannot agree the amount, the costs are to be adjudicated under Part 10 of the Legal Services Regulation Act 2015. The court also limited recovery to the costs of one junior and one senior counsel.
The underlying case concerned a duplex at 19 Millrace Crescent, Saggart, built by William Neville and Sons Construction Limited trading as the Neville Development Partnership. The homeowners said defects included damp and mould, particularly in the attic, and moved out in 2010. Their claim initially sought rescission of the building agreement and repayment of the purchase price, with damages claimed in the alternative. They abandoned the rescission claim at trial.
After a 12-day hearing, the High Court found that the roof structure should be replaced and ordered specific performance of the building agreement, with the work supervised by an engineer or architect agreed by the parties. It also allowed for recovery of rent paid for alternative accommodation after the remediation works were completed, but awarded no general damages.
The High Court later ruled that the homeowners should have accepted the contractor’s February 2016 offer to resolve remediation disputes through discussions between the parties’ professionals and, if needed, an independent expert. It ordered the contractor to pay the homeowners’ costs up to the offer date, but required the homeowners to pay the contractor’s costs from that date, subject to exceptions and credits.
On appeal, the court said the offer did not promise roof replacement. It left that question to an expert, whose decision was uncertain, and did not settle responsibility for the parties’ costs or the independent expert’s fees. The court held that the homeowners achieved a more valuable result at trial: a determination that the roof had to be replaced. It concluded that the offer was too uncertain to justify departing from the usual rule that costs follow the outcome.
The court rejected the homeowners’ complaint that the 2017 costs hearing had been unfairly truncated. It also declined to revisit the underlying remediation order, which was outside the scope of this costs appeal. The parties had agreed on an independent expert, and the court was told the works were nearing certification as complete.
For the appeal costs, the court said the homeowners were prima facie entitled to their costs. It gave the contractor 28 days to make written submissions seeking a different order; absent such submissions, the court would proceed on that basis.