CA-2025-001239 - [2025] EWCA Civ 1106

Applying these principles to the instant case, we first reject the argument that the costs claimed by Saipem and Samsung in opposing the Plans are necessarily reasonable and proportionate when compared with the enormous professional costs said to have been incurred by the Plan Companies in devising the Plans. The two tasks were obviously different, and as explained above, the possibility that a paying party may have paid its own lawyers and advisers disproportionately high fees does not make the fees claimed by a receiving party reasonable and proportionate.

Secondly, we accept the argument made by the Plan Companies that the information that Saipem and Samsung have chosen to provide is inadequate to enable us to conclude, with any degree of confidence, that they are likely to recover anything approaching £6.4 million on a detailed assessment.

As regards the charges by Mayer Brown, it is clear that detailed narratives were provided by Mayer Brown to its clients to accompany each of their bills, but no effort was made to distil those into a non-privileged summary identifying the types of work done. Moreover, Mayer Brown chose not to provide a complete set of the non-privileged logs from its timekeeping system which would at least have shown the hours worked on such matters by its various fee-earners, or to provide any clear information as to the seniority of such fee earners, or their individual charging rates from time to time.

From what was provided, it is clear that the rates charged by the partners who can be identified are approaching twice the Guideline Hourly Rates for Grade A fee earners for very heavy commercial and corporate work by centrally based London firms. Whilst some uplift on the Guideline Rates might be justifiable, we have not been provided with any justification focussing, for example, on the specific complexity or novelty of the issues raised by the Plans, any necessity for matters to be dealt with in a particularly expedited timescale, or identifying any particularly difficult international complications encountered by the solicitors that were not routine for a plan of this type. The only justification offered was a bare assertion that this was restructuring litigation “on a very significant scale”, supported by the reference to the excessive size of the court bundles, the unattributed (and questionable) comparison to Thames Water and a repeated reference to the size of the Plan Companies’ own costs. That is plainly inadequate.

The position is little better in relation to the fees of counsel. We have not been provided with any indication of the work done by counsel in advising in relation to the Plans, or the times that they spent, or the charging rates that they applied. The only significant detail provided related to the fees paid to Mr Thornton KC in preparing for the sanction hearing and the brief fees for him and Mr Colclough for the appeal. There was therefore very little for the Plan Companies to challenge, and, as explained by Males LJ in Athena Capital Fund, the fact that, for whatever reason, they did not do so expressly in their written submissions does not absolve the Court from scrutinising the amounts that should be recoverable between the parties.

The recoverability of the fees of Alvarez & Marsal is equally uncertain. We readily accept that in the nature of a restructuring plan, it may well be appropriate for creditors, in addition to seeking specialist legal advice, to seek specialist financial advice on how the proposed plan will affect their rights and financial interests in their capacity as creditors. Creditors may well need, for example, to have specialist financial advice on the opinions expressed by the advisers to the plan companies as to the likely financial outcome for creditors in the relevant alternative, as compared with the likely financial outcome for them and others under the plan. It may also be necessary, and indeed desirable, for opposing creditors who contest such opinions to seek an order from the court under CPR 35 that they should be at liberty to adduce their own expert evidence on such matters. We also accept that, in certain cases, it may be entirely appropriate for the efficient conduct of the litigation for forensic accountants, rather than lawyers, to analyse and present complex financial information in an accessible manner for the court.

As we have said, in each case it will be for the creditor seeking to recover a payment on account of such costs to identify the nature of such advice and any expert opinion or forensic evidence obtained, and to explain why it was reasonable and proportionate for it to incur such costs in relation to the proceedings.

In the instant case, there is nothing apart from a bare strapline on the invoices from Alvarez & Marsal to identify the nature of the “Financial Advisory” work that it performed for Saipem and Samsung, or to explain how the charges for that work were calculated. We accept that it is likely that at least some of the financial advice related to the effect of the Plans on the position of Saipem and Samsung as creditors of the Plan Companies (including in relation to the claims of Thai Oil), but the lack of information means that we must err on the side of caution in estimating what might be recoverable.

Alvarez & Marsal’s work product corresponding to the “Expert Evidence” invoices is apparent from the reports produced. Even though none of the reports was produced pursuant to an order for expert evidence, and the Plan Companies specifically contest the recoverability of the charges for the reports relating to the effect of the Plans on the competitive position of Samsung and Saipem, we think that it is likely that at least some of the charges under the heading of “Expert Evidence” will be recoverable. As they made clear on appeal, Saipem and Samsung relied upon the Plan Companies’ own evidence of the post-restructuring value of the equity of the Group to demonstrate the very significant benefits created by the restructuring in order to shift the evidential burden to the Plan Companies to explain why the allocation of a large proportion of those benefits to the providers of the New Money was fair. In that regard, the report from Mr. Johnston of Alvarez & Marsal was a useful forensic analysis for the Court of the Plan Companies’ own evidence. But there is a total lack of any information as to how the charges for any of the “Expert Evidence” were calculated. Accordingly, as with the “Financial Advisory” invoices, we must err on the side of caution in estimating the amount that might be recoverable.