HT-2020-000165 - [2024] EWHC 1686 (TCC)

The next matter is the interim payment on account of costs. The claimants seek such an interim payment. The draft order provided by the claimants in advance of the hearing indeed sought an interim payment, from Marbank and SCd jointly, of over £1 million.

With the addition of costs of budgeting and VAT, the claimants’ approved costs budget is £1,118,763. The claimants ask for an interim payment of £1,007,000, being 90% of that total.

Mr Crowley referred me to the decisions in MacInnes v Gross [2017] EWHC 127 (QB) and Thomas Pink Ltd v Victoria’s Secret [2014] EWHC 3258. The short point is that these cases are authority for the proposition that the court can now safely start from the approved costs budget and take that as a realistic figure that will be recovered on assessment. No major deduction needs to be made for reductions on assessment because the budget is approved. 90% is then an appropriate figure, giving some margin, on which basis an interim costs order may be made.

Mr Clay points to the fact that the budget included around £347,000 of incurred costs which formed a substantial part of the total and the reasonableness of which would not have been considered on budgeting because there were costs already incurred. I do not consider that this provides any reason to anticipate that the claimants’ recovery might be substantially less than 90% of the total budget. It is not unusual, and is often necessary, for the claimants’ costs to be front end loaded, particularly where claims involve complex technical evidence and allegations of professional negligence. It is open to defendants to invite the court to comment on a claimant’s incurred costs and/or take account of incurred costs in approving the estimated costs. I have not been told that any such issues were raised on cost budgeting in this case.

There are two factors in this case, however, which to my mind may make it different from what might now be regarded as the normal position, and both relate to the involvement of the second defendant up until 22 August 2022, a little less than six weeks before the start of the trial.

Both the remaining defendants have argued that I should make some percentage reduction to the costs recoverable against them by the claimants to reflect the fact that the total costs of the action include discrete costs incurred in pursuing M&M. Although all the defects claims advanced against M&M were also advanced against another defendant, the nature of the claim against M&M, as project managers, was different and there was discrete evidence on their role and alleged negligence. Further, there was a claim against M&M for liquidated damages which the claimants were unable to recover from Marbank because, put simply, M&M had negligently certified practical completion when they ought not to have, on the claimants’ case, done so. That claim could not have been advanced against Marbank or SCd. I accept the submission that the claimants must have incurred costs that relate to the claim against the second defendant only and which ought not to be recoverable from either Marbank or SCd.

In the case of SCd my order that SCd should pay 15% of the claimants’ costs only is intended to take account of that position in relation to M&M. So far as Marbank is concerned, it seems to me that this should be a matter for detailed assessment. There is no informed basis upon which I could make any assessment of the relevant percentage. Because the claim against the second defendant had settled before trial it was not explored at trial and I have no basis on which to assess its impact on pre-trial costs. It does seem to me, however, that there is likely to be, on assessment, some reduction from the approved budget figure and that I should make some allowance for that in ordering an interim payment.

The second issue is the length of the trial. Mr Clay submitted that the budget was based on a 12 day trial for a trial involving three defendants, and that once one defendant had gone there ought to have been some adjustment of the trial length and that would also affect the amount recoverable on assessment. There is some immediate attraction in that argument. There were, as I have said, discrete issues that related to M&M, But, having heard the trial and knowing how much was shoehorned into the trial period and how much was left to be addressed by the court on the papers, I find it difficult to see that much, if any, of the 12 day estimate could be attributed to the expected presence of a further defendant. Having considered this second issue, I am not persuaded that it should make any difference to the interim payment on account.

I, therefore, order Marbank to pay 80% of the budgeted costs as an interim payment on account of costs. By my calculation that is £895,010.82, but counsel will no doubt provide the correct figure for the order. I order SCd to pay 90% of 15% of the budgeted costs as an interim payment on account. Again, by my calculation, that is £151,033, but I stand to be corrected and counsel will include the correct figure in the order. I give both defendants 28 days to pay and not the even longer period asked for by Mr Clay.

The claimants seek an order for interest on costs incurred at 3% above base rate from the date upon which work was done or the liability for disbursements incurred. I have no doubt that there should be an order for the payment of interest, and at the said rate, but that should be from the date of payment of costs not the date when the liability was incurred. The payment of interest is to compensate the claimants for being out of pocket or for having to pay interest on monies borrowed to finance the litigation. The order that the interest should be payable from the date of payment of costs and at a rate of 3% above base rate is intended to reflect that position of compensating the claimants. For the avoidance of doubt, so far as the rate is concerned, I have dealt with the appropriate rate in the course of the hearing on 15th May and apply the same rate.

On 26 July 2022, a little over two months before the trial was due to commence, I heard an application by the claimants to strike out a multitude of passages from Marbank’s witness statements, on the basis that they did not comply with PD 57AD. Save in the case of Mr Haffenden, I made no order in the claimants’ favour.

As I observed in giving judgment on that occasion, it was not an exaggeration to say that virtually every page of the witness statements served on behalf of Marbank had a passage or more struck through as allegedly non-compliant. There were a number of themes to the complaints about the statements, but this was not a case in which, in my judgment, passages could be excised from the statements on the basis of some generalised non-compliance. It was at this stage of the proceedings impractical and disproportionate to go through every passage. In many cases, whether the passages were compliant or not was a question of fact and degree. It seemed to me that the appropriate course was to leave these matters to the trial judge who would be well-placed to give the weight he or she saw fit to the evidence.

I reserved the costs to the trial judge who would have a better understanding of the extent to which the passages complained of were relevant or compliant with the Practice Direction.

A broad theme was criticism of Mrs Vainker and the suggestion that Marbank had done things, including things that might be regarded as an admission of liability, in order to appease her. A lot of this evidence was designed to portray her as a difficult and demanding client and was no doubt intended to influence the court’s view of the seriousness of any defect and the approach taken to remedial works, on which a number of issues as to mitigation were raised.

This sort of evidence carries very little weight. Very little was said about it at trial and it will be apparent from my judgment that I derived little or nothing from it. On a broad brush approach it seems to me that, with the benefit of hindsight, what one might call trial hindsight, this was an application which was properly made by the claimants and which could have been avoided if greater attention had been paid by Marbank to compliance with the Practice Direction. However, I still regard the application as having been made too late to have been of any utility and having been over elaborate. Taking a proportionate approach, I award the claimants 50% of their costs of the application, to be assessed if not agreed, and to be paid by Marbank. For the avoidance of doubt, the aspect of the application on which I reserved the costs did not involve SCd to any extent.

That concludes my judgment on the costs matter.