Brookfield Construction (UK) Ltd v Mott Macdonald Ltd [2010] EWHC 659 (TCC)

Case No HT-08.334[2010] EWHC 659 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Date: 31.3.10
Before
THE HONOURABLE MR JUSTICE COULSON
Between
BROOKFIELD CONSTRUCTION (UK) LIMITEDClaimantMOTT MACDONALD LIMITEDDefendant
Miss Finola O’Farrell QC (instructed by Freshfields) for ClaimantMr Andrew White QC, Ms Chantal-Aimee Doerries QC, and Mr Nicholas Collings (instructed by Fishburns) for DefendantHearing Hearing dates: 13 th January, 19 th February, 30 th March 2010
Judgment
[1]INTRODUCTION This action concerns the development of the National Sports Stadium at Wembley. The claimant, whom I shall call MPX, claims damages of over £200m against the defendant, whom I shall call Mott, in respect of engineering consultancy services provided in connection with the project. Mott had originally been engaged to carry out structural and civil engineering design by Wembley National Stadium Limited (“WNSL”) but when, on 26th September 2002, MPX and WNSL entered into the principal contract for the design and construction of Wembley Stadium, MPX took over the engineering contract with Mott.[2]As is well-known, the Stadium was completed late: instead of being completed by 30th January 2006, the completion date in the original contract, the stadium was not finished until 9th March 2007.[3]There are a wide variety of claims now made by MPX against Mott, arising principally out of these delays. They can be summarised as follows: 3.1. MPX claim that they relied on Mott’s inadequate design information when they submitted their original tender, so that as a result, MPX’s tender price was to low. This is referred to as the Notional Tender Claim. It is said to be worth in excess of £13 million. 3.2. MPX say that Mott’s design failures made them vulnerable to substantial claims from Cleveland Bridge (UK) Ltd, who were the steel work sub-contractors. In consequence, MPX say that they acted reasonably in entering into SV 399 and the Settlement Agreement in order to compromise CBUK’s claims and to mitigate the delay and disruption caused to the steel works up to 2nd August 2004. This claim is, therefore, in the nature of a claim pursuant to Biggin v Permanite [1951] 2 KB 314, and is said to be worth almost £28 million. 3.3. MPX have a parallel claim for their own prolonged and increased costs as a result of a difficulties up to 2nd August 2004, which claim is valued at in excess of £4 million. 3.4. MPX ‘s biggest single claim is for the delay and disruption to the steel works from 3rd August 2004 onwards, and includes a claim for the loss of the benefit of CBUK’s fixed tender price. This claim is quantified at just under £100 million. 3.5. MPX also make further Biggin v Permanite type claims against Mott in respect of the settlements that they reached with other follow-on sub-contractors including the Structure/Enclosure trades; the Fit Out trades; and the M and E trades. These claims are said to amount to £41 million. 3.6. Further MPX have additional claims for delay and disruption including increased preliminary costs, liquidated damages imposed by WMSL, the loss of a bonus for early completion, the loss of opportunity to earn revenue on other projects, and their legal costs. These various heads of loss together are said to amount to more than £60 million. 3.7. Finally, there is a claim in respect of invalid and/or over-valued variations in the sum of £2.7 million.[4]The present proceedings come at the end of a long line of prior disputes. The claims between WNSL and MPX were compromised on 19th October 2006, although some of the heads of claim in the present proceedings will require a scrutiny of that settlement agreement. There were numerous claims against MPX by other sub-contractors, many of which I case-managed, but it is my understanding that those have all now been compromised.[5]Perhaps best-known of all has been the on-going litigation between MPX and CBUK. That litigation has become notorious for the vast costs incurred, particularly when compared with the perceived benefit to the parties. The final act in that litigation was the decision of the Court of Appeal at [2010] EWCA Civ 139 on 19th February 2010. Both Jackson J (as he then was) at first instance, and Sir Anthony May, the President of the Queens Bench Division, have been critical of the level of costs incurred in that case, particularly when compared to the level of recovery. It is my understanding that MPX have recovered a net sum of around £3.1 million as a result of the proceedings against CBUK but, because of the costs orders, they are considerably out of pocket, even before taking into account their own irrecoverable costs.[6]I am the assigned judge for the proceedings between MPX and Mott. It has been my stated aim, which I repeat here, to try and ensure that this dispute does not go the same way as the CBUK litigation, and that there is a sensible cost/benefit ratio for both parties. During the autumn of 2009, in circumstances which I describe in greater detail in Section 2 below, I became concerned about the progress of these proceedings and in particular with certain aspects of MPX’s approach to their own claim. Accordingly, I ordered two review CMC’s in January and February 2010: one to review the precise scope of the sub-trial which both parties wanted the court to fix; and the other to consider the vexed question of MPX’s costs, both past and future.[7]Those two review CMC’s took place on 13th January and 19th February 2010. I decided a range of matters during the course of those hearings and orders have been drawn up to reflect my directions. The purpose of this written judgment is, therefore, to record the principal matters which I decided at those hearings, and to act as an aide memoir, both for me and the parties, to assist in the future conduct of these proceedings. Because nothing turned on this written judgment (the relevant decisions having already been made and explained orally), it has taken rather longer to finalise than would otherwise have been the case.[2]THE LITIGATION[8]Between 2005 and 2007, the parties engaged in the TCC pre-action protocol process. Although detailed documents were produced, the process itself progressed at a desultory pace. I return in Section 4 below to the enormous costs of that process. The evidence suggests that, notwithstanding the costs, the protocol process was of little real value to either side. That is a matter of considerable concern. When the TCC moves to the Rolls Building next year, along with the Chancery Division and the Commercial Court, it will be the only part of the new Business Court which will still require the parties to undertake a pre-action protocol process. As noted at paragraphs 4.16 and 4.17 of Chapter 35 of Lord Justice Jackson’s costs review, this will be anomalous. Expensive protocol exercises with little obvious end product, such as the one engaged in here, will only strengthen the hand of those keen to see the TCC pre-action protocol process scrapped altogether.[9]The Claim Form was issued on 18th November 2008. The Particulars of Claim was served on 4th December 2008. Mott’s Defence and Counter-claim was served on 6th July 2009. A first CMC was heard on 30th July 2009. At that hearing, there were two principal matters of debate: 9.1. The deficiencies in MPX’s pleaded case; 9.2. The best way to try this enormous claim.[10]At the CMC, Mott complained that MPX’s pleading was almost impossible to understand. It is unnecessary to set out here all of the various complaints. The most important deficiency alleged by Mott was that it was impossible to work out from MPX’s pleaded case what mattered and what did not; which allegations of breach were said to trigger loss and which did not.[11]At that CMC, I broadly accepted Mott’s submissions about MPX’s pleadings. There was no doubt that MPX’s Statement of Case, although very long and very detailed, did not contain a sufficiently rigorous analysis of breach, causation and loss. Thus, in relation to delay, there was little or no attempt to identify the particular events which caused critical delay; instead, every alleged default was treated with equal significance.[12]I made various orders requiring amendments to the MPX pleadings, as well as a ‘road map’ document, in order that they could provide greater clarity about the thrust of their claim. I also required them to provide a first draft to Mott of the issues which they said would arise in the proposed sub-trial, in order to commence the process of identifying the most useful issues to be decided at that first trial.[13]This overlapped with the second issue for debate, namely whether or not the court should order a sub-trial and, if so, on what issues. I expressed my view that, particularly in the light of the unhappy experience in the CBUK litigation, it would not be appropriate to have a trial of preliminary issues and that, if at all possible, I would prefer to deal with all the issues at one trial. The parties agreed that this was not an appropriate case for preliminary issues but were united in their opposition to having one big trial. Instead, they said, since the events up to the 4th August 2004 were the most important (because after that the die was effectively cast), there should be a sub-trial which dealt with the issues up until 2nd August 2004. That would broadly encompass the claims outlined at 3.1, 3.2 and 3.3 above.[14]I made it plain that, if the court ordered a lengthy sub-trial in 2011 to address these claims, the court would, save in exceptional circumstances, expect the parties to settle their differences thereafter. I stressed that, since even the sub-trial would take up the bulk of my working life for 2011, it was not a proportionate use of the court’s resources to envisage a further lengthy trial at some unspecified time thereafter.[15]A review CMC was fixed for 20th November 2009. The intention was that, if MPX complied with my various orders then, at that stage, the parties would be in a position to agree a more detailed breakdown of the issues for the sub-trial. Unhappily, MPX failed to comply with my orders. In the end, MPX obtained an adjournment of the CMC and it was not heard until 11th December 2009.[16]At the adjourned review CMC on 11th December 2009, the differences between the parties were, if anything, greater than they had been in July. MPX had provided some further documents but Mott complained that they had still failed to address adequately the questions of criticality and relative significance which had formed the subject matter of their criticisms on 30th July. Moreover, MPX had not addressed the question of the proposed issues to be tried in any coherent way, and so a more detailed consideration of the scope of the sub-trial was not possible. Also at this hearing, Mott raised again their complaints about the size of MPX’s costs.[17]I was obviously concerned at this turn of events. It seemed to me that, because of the detail, MPX were struggling to present a cogent and coherent case and that it was now unclear whether the cut-off date of 2nd August 2004, proposed for the purposes of the sub-trial, was meaningful or realistic. Accordingly, I ordered MPX to provide a ‘road map’ to their claims, and fixed the two review CMC’s for January and February 2010, at which the issues of costs and the scope of the sub-trial could be addressed.[18]The hearing on 13th January 2010 dealt with costs. The issues between the parties, and my decisions and/or findings in relation to costs, are set out in Section 4 below. The hearing on 19th February 2010 was concerned with the scope of the sub-trial, and the issues between the parties and my conclusions on those matters are set out in Section 3 below.[19]At the hearing on 19th February 2010, it seemed to me that MPX had made some progress towards providing a clearer presentation of their case. It was for that reason that I refused Mott’s further request for the provision of additional information, and required Mott to maintain the date for their amended defence and counter-claim of 30th March 2010. However, I indicated that I remain troubled that MPX’s pleaded case is still more opaque than it should be and that, certainly for the purposes of next year’s sub-trial, further work on it is likely to be required.[20]At the subsequent hearing on 30th March, I reluctantly extended Mott’s time for the service of their amended defence and counterclaim, and their responses to the RFI and certain of the appendices attached to the amended particulars of claim, until 30th April 2010. This led to further extensions in relation to witness statements and experts’ joint statements and reports. There is now no ‘fat’ in the timetable at all, and I made clear to the parties that any further slippage would inevitably lead to the adjournment of the sub-trial to 2012 or beyond.[3]THE SCOPE OF THE PROPOSED SUB-TRIAL IN 2011[21]As noted above, the sub-trial currently fixed for 2011 had its genesis in the first CMC on 30th July 2009. The parties were agreed that a sub-trial should be fixed in the first six months of 2011 to deal with the issues up to the 2nd August 2004. Since that was a matter on which the parties were agreed, I considered that it was appropriate to make an order in the terms sought.[22]However, as the difficulties unravelled in the autumn of 2009, I became concerned that the parties had not fully addressed the potential difficulties inherent in this agreement. There were two principal points that troubled me: a). First, the majority of the claims, and certainly the big-money claims in this case, are concerned with delay, in one form or another. In damages claims of this sort, in order to recover, a claimant generally needs to demonstrate critical delay caused by the breaches complained of. Critical delay is usually assessed at the end of the project, when all relevant factors can be taken into account. It was therefore difficult to see how any meaningful decisions as to critical delay could be made at a sub-trial which had a cut-off date part-way through the project, namely 2nd August 2004. b). Secondly, if the scope of the issues for the sub-trial was limited to the claims outlined at paragraphs 3.1-3.3 above, then I would be dealing with claims that were, at the very most, worth only 20% or so of the overall claim. How would a decision on a relatively small percentage of the overall claim lead to a settlement of the whole case?[23]At the hearing on 19th February 2010, the parties maintained a united front as to the overall scope of the sub-trial, although there was some disagreement as to the particular sub-issues which should or should not be dealt with. I was told that it would be possible to address issues of criticality, even with a cut-off date of 2nd August 2004. Equally importantly, I was told that all the relevant breaches had occurred by that date and that, accordingly, my determination at the sub-trial of the issues of breach as between MPX and Mott would go a long way to determining all of the issues in the case.[24]Therefore, following lengthy debate and discussion, and a written agreement between the parties on the issue of criticality, I ordered that the sub-trial in 2011 would determine the following issues:
“(1) All issues of breach (save for the variations claims) (2) The Notional Tender Claim (Section 7 of the Amended Particular of Claim) (3) The following CBUK Settlement Claims: (i) the claim for £799,139 in respect of SV 399; (ii) the claim for £5,250,000 paid to CBUK under the CBUK Settlement Agreement; (iii) the claim for £6,073,279 in respect of the additional premium within the £12 million lump sum agreed with CBUK; (iv) the claim for the premium paid for the fabrication of steel for the PPT and bowl by Hollandia (excluding the quantum of such claim); (v) the claim for £1,280,700 in respect of the premium paid for the steel which was to be fabricated by CBUK's subcontractor in China, Shanghai Grand Tower, but which was returned to the UK for fabrication; (vi) the claim for £68,911 in respect of the audit of the moving roof carried out by Hollandia; (vii) the claim for £1,230,527 in respect of the premium paid for the pre-cast terracing installation by PCE; (viii) the claims for £6,001,955 and £167,549 in respect of payments made on a cost reimbursable basis for steel site erection works up to 2 August 2004; (ix) the claim for £500,000 in respect of the premium paid to CBUK for the use of its temporary works. (ii) the claim for £5,250,000 paid to CBUK under the CBUK Settlement Agreement; (iii) the claim for £6,073,279 in respect of the additional premium within the £12 million lump sum agreed with CBUK; (iv) the claim for the premium paid for the fabrication of steel for the PPT and bowl by Hollandia (excluding the quantum of such claim); (v) the claim for £1,280,700 in respect of the premium paid for the steel which was to be fabricated by CBUK's subcontractor in China, Shanghai Grand Tower, but which was returned to the UK for fabrication; (vi) the claim for £68,911 in respect of the audit of the moving roof carried out by Hollandia; (vii) the claim for £1,230,527 in respect of the premium paid for the pre-cast terracing installation by PCE; (viii) the claims for £6,001,955 and £167,549 in respect of payments made on a cost reimbursable basis for steel site erection works up to 2 August 2004; (ix) the claim for £500,000 in respect of the premium paid to CBUK for the use of its temporary works. (4) All issues of causation (including delay and disruption) up to 2 August 2004. It is recorded that the parties have agreed that: (i) the Court should investigate the causes of delay up to 2 August 2004; (ii) the Court should determine which events caused critical delay to the Project judged at 2 August 2004; (iii) if the Court concludes that as at 2 August 2004 critical delay hadoccurred for which Mott is responsible, the question of whether that delay caused critical delay to the completion of the Project may depend on facts which occurred after 2 August 2004 which are not the subject of the Sub-Trial. (iv) The Court will not investigate or determine the credit that is to be applied to any claim.”
[25]In addition, at the hearing on 19th February, I made plain that the shape of the sub-trial would be as follows: a). The witnesses of fact will give their evidence during the Easter term in 2011, starting in January and finishing at the end of March. The parties will have to agree a detailed timetable to ensure that that is done. There can be no question of any extension of that part of the timetable. b). The expert evidence will commence after the Easter vacation, in April. The expert evidence must be completed by the end of term in late May, and will again need to be the subject of an agreed timetable. The parties are optimistic that this will not prove a difficulty. c). The final submissions will be provided in writing some time in the second week of June and there will be oral submissions in the last week of June. That will then allow me to break the back of the subsequent Judgment during July 2011.[26]Accordingly, the shape and the detailed contents of the sub-trial in 2011 have now been fixed. However, if, during the course of preparation, the parties identify any further issues which, if decided one way or the other, could have a major effect on any subsequent settlement of the action as a whole, then they should tell the court immediately. I remain enthusiastic about deciding as much as possible at the sub-trial in 2011, principally because I shall be a good deal less enthusiastic about deciding any issues in this case thereafter.[4]COSTS[27]At both the first CMC on 30th July 2009, and the review CMC on 9th December 2009, Mott complained bitterly about the level of MPX’s costs. Although the bulk of those costs have already been incurred, and there was therefore little that could be done about such costs now, Mott were understandably anxious to obtain an expression of my views, no matter how general, on the costs that had been incurred to date.[28]On behalf of Mott, Ms Doerries, who presented this part of the argument on their behalf, identified two reasons why they sought a variety of orders or indications from the court as to the costs already incurred. First, she said, because the costs were so high, indications would assist the parties in their overall dealings in the case. I took her to mean that such indications may assist the prospect of settlement or ADR. Secondly, she said that, in relation to some of the costs incurred to date, further consideration by the court may be required in order for the court then to work out whether the estimated costs going forward could be regarded as reasonable or proportionate.[29]It seemed to me that both of those points were validly made. It was of use for the court to give an indication as to certain elements of the costs that had been incurred by MPX. By the same token, I accepted Miss O’Farrell’s submissions that it would not be appropriate to order detailed cost assessments at this stage, because that would create further satellite litigation and indeed further costs. It would also distract the parties from the extensive work necessary in order to be ready for the sub-trial of the substantive issues in 2011.[30]Mott’s first complaint arises out of the overall figures indicated by MPX in their most recent estimate dated 11th December 2009. This demonstrates that, up to that date, MPX had incurred £28,675,000 by way of costs. In addition, their estimated costs at the end of the sub-trial were a further £17m odd. Thus, MPX estimate that, just to get to the end of the sub-trial, they will have spent £45,695,000.[31]There can be no doubt at all that these are huge figures. They amount to more than is at stake in the issues to be decided at the sub-trial. In the 25 years that I have been involved in construction cases, I have never seen costs figures at such a level. As a matter of general impression, I am presently unable to see how such costs could be described as reasonable or proportionate.[32]The suggestion in the MPX documents is that these figures are high because this is a big and complicated claim. But that is a self-fulfilling prophesy:
‘there is a lot of money at stake so therefore the costs will be high’
. But such a conclusion does not necessarily follow: large sums can be at stake in a case where the issues are simple, and therefore relatively cheap to litigate, and smaller cases can abound with points of difficulty which are expensive to resolve.[33]In my view, the level of the costs incurred to date has to be considered against the product of that expenditure. The product, at present, principally comprises the MPX pleadings. For the reasons that I have already explained, those pleadings were deficient and, although they have been improved recently, I remain concerned as to the clarity of their presentation. Therefore, in my judgment, MPX cannot say that the high expenditure has lead to a fully analytical set of pleadings. For these reasons, I consider that the overall costs incurred by MPX are potentially disproportionate and unreasonable.[34]The same points (as to prima facie disproportionality and unreasonableness) can be made in relation to the second aspect of the costs which Mott criticised, namely the sums which MPX have incurred to date on experts. On the MPX estimate of costs, they spent £5m on experts up to September 2007 (the pre-action protocol process stage) and a further £7m between October 2007 and the end of November 2009. Thus £12m out of the £28.5m so far incurred has been spent on experts. That is a very high figure.[35]Again, the potential unreasonableness and disproportionality of that figure seems to me to be confirmed by the absence of any clear expert input into the material that I have seen. For example, for £12 million, I would have at least expected an expert analysis of what events are important and why; what caused critical delay and how, and what did not cause critical delay. As I have already pointed out, the existing pleadings lead me to conclude that this is not something which MPX have properly tackled. There are sometimes delay cases when a party has not had the benefit of expert guidance at the outset, so that his original pleadings lack a clear focus, but it is difficult to see how such a state of affairs can be perpetuated here, when MPX have been spending so much on their experts. Accordingly, it seems to me that the sums spent on experts are prima facie unreasonable and disproportionate.[36]At the hearing on 13.1.10, I ordered Freshfields, MPX’s solicitors, to provide a more detailed breakdown of the experts’ fees incurred to date. That was provided, although I consider that the detail provided remains on the thin side. However, it is not at this stage appropriate to require Freshfields to provide further information on this topic.[37]The third complaint made by Mott is that MPX unreasonably changed solicitors at the end of the pre-action protocol process, and that this has given rise to significant increase in costs. Although, as noted above, I am taking the position between April 2005 and September 2007 as broadly equating to the pre-action protocol process, it is right to note that the September 2007 cut-off was actually the date when MPX changed solicitors from Clifford Chance, who had acted for them throughout the CBUK litigation, to Freshfields. On behalf of MPX, Miss O’Farrell properly accepted that any wasted or duplicated costs as a result of that change of solicitors would not be recoverable. It seems to me inevitable that there would have been such wasted or duplicated costs: indeed, I was told at the hearing on 13th January that Freshfields had given MPX a credit of £100,000 to allow for this duplication and their reading into the case.[38]Thus, the only issue on this aspect of the costs will be whether or not that allowance was sufficient. On the face of it, I would have thought it was not enough, given the volume of documentation in this case. But beyond that general observation, it seems to me that this issue would be a matter of detailed costs assessment, and is not a matter that I can further address at this stage.[39]Mott’s fourth complaint concerns the costs of, occasioned and thown away by the liquidation of an Australian firm called Potter Farrelly and Associates, who had been entrusted with the document management. It seems to be a feature of this sort of litigation that electronic document management is farmed out to other firms, which seems to me to be an unfortunate development, and one which is likely to increase costs unnecessarily. Of course, such increased costs are exacerbated when, as here, the firm in question goes into liquidation.[40]Miss O’Farrell properly accepted that the costs of, thrown away and occasioned by their insolvency will not be recoverable against Mott and it seems to me that concession was properly made. As to the amount of such costs, it is impossible for me to comment at this stage and it would not be proportionate to require such costs to be identified now, particularly when the disclosure process is still ongoing.[41]Mott’s fifth complaint concerns the figure of £8.48m incurred by MPX during the pre-action protocol process. I am confident that is the biggest sum ever expended on the pre-action protocol process in the TCC. Not only is the figure high but, for the reasons that I have given, it is potentially unreasonable and disproportionate. Of course, it is principally made up of the £5m in relation to experts’ fees and I have already set out my concerns about the level of those fees and the disappointing product that has eventuated from their involvement thus far. At the hearing on 13th January, I described the £5m as “astonishingly high” and I do not resile from that view.[42]The sixth item raised by Mott concerns Appendix 25 to their amended Particulars of Claim, which has been abandoned in favour of Appendix 25a. I have awarded Mott the costs of, occasioned and thrown away by that amendment, and that is an order which Mott could attempt to quantify at this stage if they so choose. In those circumstances, MPX would not be entitled to their own costs of preparing the original Appendix 25 but, as I explained on 13th January, it would be inappropriate to require MPX to quantify that amount at this point, particularly since MPX have more important things to concentrate on. I therefore refused to order MPX to quantify the amount they had incurred in the preparation of the original Appendix 25.[43]The seventh complaint raised by Mott concerned the increase in the total costs estimated by MPX between July 2009 and December 2009. In July MPX indicated that their costs (including their estimated costs up to the end of the sub-trial) were going to be in the order of £39.5m. In November they estimated that the total would be £45.5m, an increase of £6m. This was at least partly explained by the fact that MPX’s original estimate was based on a two month hearing in 2011, whilst the December estimate reflects the fact that this time has now been extended to a minimum of four months.[44]On the other hand, it appears that getting on for £3m of this increase was referable to engineering and steelwork experts, and what was described as “technical assistance employed directly by MPX”. This seemed very vague. Thus, at the hearing on 13th January 2009, I ordered MPX to provide an explanation for this increase and for the precise nature of technical assistance being rendered. I did not make any other order in relation to the increase of £6m between the June and November estimates.[45]The final complaint raised by Mott is the increase in the actual costs between the CMC in July 2009 and December 2009. On this point, I accepted Miss O’Farrell’s explanation for that increase and made no other comments in respect of it. I did however accept Ms Dorries’ observation that, on these figures, MPX were incurring costs at a rate of slightly less than £1m a month, which was obviously very high, and further demonstrated that the credit of just £100,000, given by Freshfields at the outset, was almost certainly a significant underestimate.[46]As to the future costs, I was concerned at the levels on both sides and therefore required the parties to exchange regular cost updates. I fixed the dates for those exchanges as 1st April, 1st July and 1st October 2010, and the first day of the trial in January 2011.[47]The remaining issue was whether the court should make any orders by reference to the amount of the estimated costs. For example, in Barr and others v Biffa Waste Ltd (No 2) [2009] EWHC 2444 (TCC), I ordered that each side’s recoverable costs were limited to the estimate before me, subject to their being able to persuade the court at a later date that there was an unforeseen reason why the costs were higher than had been estimated.[48]After considerable discussion, each side agreed to be bound by an order that:
“(a) Each party’s estimate of costs provided to the Court in advance of the CMC on 11 December 2009 is to be regarded as their respective maximum likely recovery on costs at the end of the Sub-Trial, subject to (b) below. (b) If either party’s estimate has good reason to have incurred higher costs it is open to that party to identify and explain to the Court why those costs are in excess of the estimate.”
[49]Mott’s overall estimate was £27,494,500; MPX’s estimate was £45,695.000. Thus, costs would only be recoverable beyond those figures if the party in question was able to demonstrate an unforeseen increase which, in all the circumstances, I concluded was reasonable. In this way, therefore, the court has at least achieved a form of costs control which is reasonable, proportionate, and in accordance with the overriding objective.[5]THE WAY FORWARD[50]MPX still need to achieve greater clarity in the presentation of their case. Over the next few months, that requirement is bound to focus on the issues to be heard at the sub-trial. I do not want future case management conferences to become bogged down (as so many of the past CMC’s have) in detailed assessments of MPX’s pleadings. Accordingly, it seems to me that any further pleading/presentation points which Mott may have on the MPX pleadings need to be addressed before the end of next term, and that thereafter, the parties need to prepare for the trial on the basis of the pleadings as they then stand.[51]As to what is needed to improve presentation, I would urge MPX to move away from an approach which, out of caution, keeps everything in ‘just in case’, and to adopt a bolder and more analytical approach to the key issues. Every delay claim should be capable of being summarised on one sheet of paper and, notwithstanding the detail here, I do not believe this claim to be any different.[52]I have been concerned about what I perceive to be a lack of co-operation between the parties. Large TCC cases of this type require a considerable degree of co-operation between the parties and their solicitors; otherwise, as the CBUK litigation shows only too well, it can be very easy for the litigation to take on an (expensive) life of its own. As the parties prepare for the sub-trial, I would urge solicitors and counsel to meet on a regular basis, and to endeavour to iron out the minor differences between them, leaving only the significant disputes between them (if any) to be dealt with by the court.[53]I am required to provide the parties with robust encouragement to explore all ways of resolving their differences without a trial. It seems to me that the size of this case (both financially and in terms of documents) makes it ideally suitable to all the many forms of ADR. In particular, I would have thought that a mediation, conducted by one of the many experienced construction practitioners who offer a mediation service, would be a sensible next step, to be taken sooner rather than later.[54]I have already referred to the negative comments by Jackson J and by the President of the Queen’s Bench Division about the level of costs incurred in the CBUK action. By reading the judgments in that case, there is a sense that the parties allowed it to get completely out of hand, and that the senior figures directing the affairs of each of the two client companies had become remote from the action, battling on and taking every point, because there was perceived to be no other alternative.[55]In the present case, there is a clear and obvious alternative: ADR. In my view, the parties need to explore that option as soon as possible after the service of Mott’s amended pleadings at the end of April. I should make it clear that, at the end of the sub-trial, I will make detailed costs orders and that, on the basis of the documents, my perception of one side’s willingness (or otherwise) to participate in ADR will be an important element of my deliberations on costs.[56]If there is a genuine effort on both sides to resolve their differences by ADR, but that attempt results in failure, then I will deal with the issues noted above at the sub-trial in 2011. Indeed, at that sub-trial, I would like to be in a position to decide as many of the issues between the parties as possible. I repeat that the parties should approach the 2011 sub-trial on the footing that it is most unlikely that there will ever be another.

Cited in 1 later judgment