HT-2021-000466 - [2024] EWHC 2110 (TCC)

This interest claim is for financing the cost of the remedial works (and similar costs) during the remedial works period. IRDL claims £149,285.21 under this head. This claim is arrived at by taking the mid-point of the remedial works period for the preliminary and construction costs, the midpoint of the storage and security costs and the actual date of the hotel accommodation and then running interest from that date to the agreed date the remedial works concluded.

The Defendant (“Arcadis”) submits (in paragraph 15 of Ms Piercy KC’s skeleton argument):

At the time of drafting this Note, the experts are making progress with agreeing dates from which to calculate interest. If agreement can be reached on dates, then Claim 2 should be capable of agreement as the applicable interest rate is agreed to be 8% simple and the end date is agreed as 23 July 2021. Agreement of dates, however, has been difficult because there is little evidence to show when payments were made by IRDL for the sums awarded. Accordingly, the parties have been attempting to agree “mid-point” dates between possible start and end dates. The ambiguity of the start and end dates may mean that not all of these dates can be agreed, particularly in relation to the FK costs.

Thus, the central issue between the Parties is whether the IRDL’s approach of taking the midpoint of the period during which the remedial works were carried out is correct or not. The objection to that approach is that there is uncertainty as to when sundry invoices were actually paid.

In paragraphs 18 and 19 of her skeleton argument, Ms Slow KC submits:

18.

Be that as it may however, the principle of the approach of taking the mid-point for the construction costs and applying interest from the mid-point (or on half the sum for the whole period) was adopted and agreed by both experts. The point of principle was identified as a point of agreement between Mr Huntley in cross examination [Day5/203-4]. There is no basis now for departing from this agreed approach. Contrary to what has belatedly been suggested by Arcadis in correspondence, the experts did not suggest that this approach was agreed due to any lack of documentation (they have every relevant interim payment certificate for example) but rather in the interest of proportionality and pragmatism.

19.

As regards the remedial works, it may be possible to identify some specific costs which were incurred at a later point in time, however, it is also common for substantial proportions of the cost to be incurred at an early point in the works (such as the purchase of materials, in this case substantial rebar costs). It may also be that payments were made on account which were later revised downwards on assessment. The logic of this approach is that it is all or nothing, swings and roundabouts. Lest it be suggested otherwise, IRDL submits that it is wrong in principle to cherry pick specific costs which were later and treat these in a different way, the principle of the approach is broad brush to do overall justice in a proportionate way, which avoids tracking every single invoice and tracking interest on each amount for specific dates. This approach has been agreed by the quantum experts and the interest calculations prepared on this basis, IRDL submits that any attempt to depart from it is to revisit points of principle after the fact.

There was some dispute as to precisely what Mr Huntley was agreeing to in the passage of cross-examination referred to in paragraph 18 of Ms Slow’s skeleton. With the benefit of hindsight, I can see that there may be some room for doubt as to what Mr Huntley was agreeing to. Whatever the rights and wrongs of that, it seems to me that IRDL’s approach is right in principle.

There is a separate point which is whether interest is payable under Claim 2 in respect of the awards I made in respect of FKB Preliminaries (£984,528.48) and FKB Construction (£2,213,927.58). The point raised is that it was not until November 2023 that settlement was reached with FKB under which these sums were paid. Ms Slow answer that that settlement was irrelevant since the relevant costs had been paid prior to the settlement.

I was not pointed to any evidence on this matter. It seems to me improbable that FKB went unpaid in respect of £3 million until November 2023: in the absence of any evidence that that was so, I accept Ms Slow’s submission that the settlement is irrelevant.

It follows that I accept IRDL’s claim for £149,285.21 as a reasonable assessment of IRDL’s actual interest costs in the period up to the end of the execution of the remedial works necessitated by Arcadis’s admitted negligence. If I am wrong about that, I would hold in the alternative that this is a reasonable award of interest in respect of this period under the Senior Courts Act.