Digging in Your Heels in Commercial Disputes Could Cost You Dear!

Intransigence in commercial disputes can be extremely costly and it is always preferable to attempt to reach a compromise. In one case which gave a valuable insight, the estimated legal costs of litigating a building contract dispute in respect of works carried out at a football stadium came to more than the sum at stake.

The contractor launched proceedings against the football club’s holding company, claiming to have been underpaid by £805,000 for its work. The company disputed the debt and alleged that some of the works were defective. The case had been set down for a four-day High Court trial.

The contractor estimated its costs of fighting the case at £824,000 and that prompted the company to challenge the costs budget at a preliminary hearing. In ruling on the matter, the Court found that a case would have to be wholly exceptional to justify a costs budget which was greater than the sum in issue.

Describing the contractor’s costs estimate as ‘exorbitant’ and ‘grossly excessive’, the Court found that it had been overstated by almost 100 per cent and cut it down to £425,000. That was roughly in line with the company’s costs budget, which came to £455,000.