Beware of Open Offers!

O'Reilly & anor -v- Neville & ors  [2018] IEHC 228 Shane and Antoinette O’ Reilly bought a three bed property at Millrace Crescent, Saggart in 2005 from the Defendant builders and developers. The house suffered from condensation, mould and fungus which were caused by poor ventilation in the attic and bedrooms. The O’ Reillys were forced to leave the house and live in rented accommodation. They sought rescission of the building contract and compensation for the inconvenience, distress and upset that they had suffered. Binchy J awarded the Plaintiffs specific performance of the building contract and ordered the Defendants to carry out specific repairs on the building to the satisfaction of an independent architect. He also awarded the Plaintiffs the costs of renting alternative accommodation, but he did not make any award for general damages. Costs The proceedings took 11 days in the High Court. At the Costs Ruling on 18 January 2018, the Plaintiffs sought the costs of the main proceedings. The Defendant builder made the following arguments:

• It had made numerous efforts to resolve the dispute in advance of the hearing, and on that basis, the Plaintiffs ought not to be entitled to the full costs of the proceedings.
• The Order for specific performance of the contract was no more than what the Plaintiffs would have achieved if they had accepted one of the previous offers made to repair their premises made by the Defendant.
• Order 99 Rule 1 of the Rules of the Superior Court supports the position that the Court can have regard to offers of settlement made in writing when making an order on costs.

Binchy J decided that the final offer made by the Defendants in February 2016 should have been accepted by the Plaintiff. This letter of offer “provided a comprehensive mechanism for the objective identification of defects in the dwelling house as well as the measures required to address those defects.” He agreed with the developer’s submission that throughout the litigation, they showed a willingness to engage with the Plaintiffs to resolve matters, but this was not reciprocated by the homeowners. He stated that while the original workmanship could be criticised, the same could not be said for the way in which the Defendant had addressed the Plaintiff’s complaints, and had dealt with the subsequent legal proceedings. In failing to engage, the Plaintiffs had “caused almost all of the costs that followed”. Binchy J was of the view that the approach of the Plaintiff had made a 1 day hearing run for 11 days. Decision On that basis, Binchy J awarded the Plaintiffs the costs of their claim for alternative accommodation but he awarded the costs of the remainder of the case to the developer, from the date of their final letter of offer to the Plaintiffs. Binchy J outlined that: “Parties to proceedings are to be encouraged and not discouraged from putting forward       proposals which will lead to an early resolution of litigation with all attendant benefits,   including significant savings of costs and court time.” The ruling is a warning that winning a case does not automatically result in an award of costs and that parties to litigation should carefully consider all offers of settlement made by another party to resolve the issues in dispute. A copy of the judgement can be found here.