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

The Plan Companies contend that the total costs of over £6.4 million now claimed by Saipem and Samsung are excessive and wholly disproportionate for litigation that involved only eight days in court (a total of five for the convening hearing and the sanction hearing at first instance, and a further three on appeal). They point out that Saipem and Samsung did not adduce any substantial evidence of fact and did not adduce any expert evidence to challenge the Plan Companies’ evidence of the post-restructuring value of the Petrofac Group or of the return to creditors in the relevant alternative. The Plan Companies contend that the information provided by Saipem and Samsung is wholly inadequate to enable the court to make a determination of an appropriate payment on account, and that if the Court is minded to make an order for an interim payment on account at all, it should be limited to £500,000.

As regards Mayer Brown, the Plan Companies object, in particular, to the provision of incomplete narratives showing the work done and to the fact that the hourly rates charged exceed by some margin the Guideline Hourly Rates for solicitors in Appendix 2 to the Guide to the Summary Assessment of Costs (the “Guide”). They contend that it would seem that a significant amount of reliance was placed upon counsel, and that on the basis of the narratives that have been provided, a disproportionately large amount of the charges (approaching 50%) seems to have been done at partner level rather than being delegated to more junior fee-earners.

As regards the charges by Alvarez & Marsal, the Plan Companies contend that the fees for “Financial Advisory” work are entirely unparticularised and cannot be assumed to be recoverable costs of litigation. They further contend that the costs of “Expert Evidence” are excessive given that Saipem and Samsung did not actually challenge the expert evidence of the Plan Companies as regards valuation, and their evidence as to the effect of the Plans on their competitive position was found to be irrelevant.

In response, Saipem and Samsung assert that the costs that they claim are entirely reasonable and proportionate given the size of their claims that the Plans sought to extinguish (US$1 billion) and in comparison to the extraordinary US$111 million on professional fees that the Plan Companies had already spent on formulating the Plans by January 2025. Saipem and Samsung contend that the instant case is “restructuring litigation on a very significant scale”, and support this contention by a footnoted reference to the size of the bundles used at the court hearings, a comparison to the Plan Companies’ costs, and a media quotation of an unnamed adviser to the Plan Companies saying that the Plans were “bigger and more complicated than Thames Water”.

As regards the fees of Mayer Brown, Saipem and Samsung claim that the detailed narratives on some of the invoices were inadvertently disclosed and are privileged. They seek to justify the hourly rates charged by the fee-earners at Mayer Brown by quoting §29 of the Guide which indicates that significantly higher rates might be appropriate where substantial and complex litigation involved factors such as high value, complexity, urgency, importance, or an international element. But they do not go on to explain how those factors applied to Mayer Brown’s work.

Saipem and Samsung further contend that the complexity of the Plans meant that the use of Alvarez & Marsal as financial advisers to assist them in the plan process was appropriate and should be recoverable. They also submit that the charges of a separate team at Alvarez & Marsal to produce expert evidence were appropriate; and that Alvarez & Marsal’s “enrichment assessment” report showing the returns on the New Money was essential to the outcome on the central issue in the case.

Finally, Saipem and Samsung point out that the Plan Companies do not expressly object to the fees charged by their counsel, and therefore contend that 50-60% of those costs should be paid on account in any event.