Cleveland Bridge UK Ltd v Sarens (UK) Ltd, Court of Appeal - Technology and Construction Court, April 18, 2018, [2018] EWHC 827 (TCC)

Resolution Date:April 18, 2018
Issuing Organization:Technology and Construction Court
Actores:Cleveland Bridge UK Ltd v Sarens (UK) Ltd


Neutral Citation Number: [2018] EWHC 827 (TCC)

Claim No: HT-2017-000221




Royal Courts of Justice

Strand, London, WC2A 2LL

Date 18 April 2018


Miss Joanna Smith QC sitting as a Deputy


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Mr Lixenberg (instructed by Burness Paull LLP) for the Claimant

Ms Bodnar (instructed by Freeths LLP) for the Defendants

Hearing date: 10 April 2018

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JUDGMENTDeputy Judge Miss Joanna Smith QC:


1. Further to my judgment in this matter, Sarens accepts that it must pay CBUK's costs of the action. However, there remains an issue between the parties as to the amount of the payment to be made by Sarens to CBUK on account of costs pursuant to CPR 44.2(8), which provides that ``Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so''.

2. It seems that this issue arose shortly before the hand down of my judgment and although both sides provided me with short notes for the hearing, they expanded upon these in detailed submissions and referred to various authorities not previously before the court.

The Issue

3. CBUK says that it has incurred in the region of £140,000 in costs, but it takes as its starting point the figure of £128,124.54, being the total figure in its agreed costs budget. From that figure, it has, first, deducted costs that were never in fact incurred (amounting to £24,010) to leave £104,114.54. Second, it has added the costs of two applications in December 2017 (``the December Applications'') which Sarens accepts in principle that it must pay, in the sums of £6,866 and £13,409.50 respectively (as set out in its costs schedules served for the purposes of the December Applications). This exercise produces a total figure of £124,390.04 (which I shall refer to as ``the Adjusted Figure'').

4. CBUK contends that it is entitled to a payment on account of costs from Sarens of 90% of the Adjusted Figure, amounting to £111,951.04.

5. Sarens opposes a payment on account of costs at this level, contending, in short, that it is not justified on the authorities and that there is every reason to think that the Adjusted Figure will be reduced on a detailed assessment. Sarens says that it should not be required to pay more than £74,634.02 on account, explained as 60% of the total adjusted amount of £124,390.04 in a letter from Freeths LLP dated 6 April 2018 acting on behalf of Sarens, or as approximately 80% of the realistic highest starting point for CBUK's costs taking into account the detailed criticisms of those costs raised in Ms Bodnar's Note for the hearing.

6. Those criticisms are twofold: first that the hourly rates of CBUK's solicitors are excessive and that there would be a good reason on a detailed assessment for reducing the partner hourly rate in respect of both incurred and estimated costs in CBUK's agreed Budget, together with the partner time set out in the two costs schedules for the December Applications by approximately 30%; and second that there is reason to think that CBUK will not recover the entirety of its incurred costs of £47,859.54 (as set out in its agreed Budget) on a detailed assessment owing to the fact (i) that this figure includes £6,428.54 for costs incurred by Bond Dickinson, a firm of solicitors which acted for CBUK in the adjudication but not in these proceedings; and (ii) that this figure includes a further sum of £7,307 for pre-action costs in circumstances where there was no pre-action correspondence and a substantial sum has been incurred on the issues/statements of case phase, notwithstanding that CBUK has always maintained that the case is straight-forward.

7. Taking account of these likely deductions, says Sarens, reduces CBUK's Adjusted Figure to £94,540.90, the realistic highest starting point for CBUK's costs.

Is CBUK entitled to a 90% payment on account of its costs?

8. In support of the proposition that CBUK is entitled to 90% of the Adjusted Figure, Mr Lixenberg, on behalf of CBUK, relies on the decision of Coulson J in MacInnes v Gross [2017] EWHC 127 (QB), at paragraphs [23]-[28], which he says should be applied as an over-arching principle when dealing with an application for a payment of costs on account in a case where there is an agreed or approved costs budget, as is the case here. Cost budgets were agreed pursuant to the terms of the Order of Fraser J dated 18 September 2017. (As an aside I should say that there was an attempt on the part of Sarens to suggest that there was no costs management order in this case and that the court had not approved the parties' agreement, but given the terms of Fraser J's Order, I cannot see that such an argument is sustainable - in my judgment his Order was plainly intended to indicate the court's approval of the parties' budgets insofar as they could be agreed).

9. In MacInnes v Gross, the defendant had succeeded at trial and its approved costs budget was in the sum of £570,000, although its total costs were said to be very much higher than that. Coulson J said this at [25]-[27]:

``25...In my view, the first defendant's approved costs budget is the appropriate starting point for the calculation of any interim payment on account of costs. CPR 3.18 makes plain that, where there is an approved or agreed costs budget, when costs are assessed on a standard basis at the end of the case, ``the court will...not depart from such approved or agreed budget...

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