Midas Construction Limited (in liquidation) v Harmsworth Pension Funds Trustees Limited [2025] EWHC 1122 (TCC)

[2025] EWHC 1122 (TCC)

Case No HT-2024-000444

I N THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

TECHNOLOGY AND CONSTRUCTION COURT

Venue 7 Rolls Building, Fetter Lane,

London,

EC4A 1NL

Date 9 May 2025

Before

MARTIN BOWDERY K.C.

(sitting as a Deputy High Court Judge)

Between

MIDAS CONSTRUCTION LIMITEDClaimant

HARMSWORTH PENSION FUNDS TRUSTEES LIMITEDDefendant

MR RIAZ HUSSAIN KC and MS CHANTELLE STAYNINGS (instructed by Gateley Plc) appeared for Claimant

MS CAMILLE SLOW KC (instructed by Mishcon de Reya LLP) appeared for Defendant

___________

JUDGMENT

__________

This judgment was handed down by the court remotely by circulation to the parties’ representatives by email and released to The National Archives. The date and time for hand-down is deemed to be 9 May 2025 at 10.30am

THE PARTIES

[1]The Claimant is Midas Construction Limited (In Administration) (company registration number 01240442) whose registered office is c/o Teneo Financial Advisory Limited, The Colmore Building, 20 Colmore Circus Queensway, Birmingham, B4 6AT.

[2]The Defendant is Harmsworth Pension Funds Trustees Limited (company registration number 01482455) whose registered office is DMGT Pensions, 2 Northcliffe House, Derry Street, London, W8 5TT.

THE CONTRACT AND THE WORKS

[3]The parties entered into an agreement on the JCT Design and Build Sub-Contract 2011 form (as amended) dated 9 July 2018, for works at a development at "Unity Street, Bristol" ("the Contract").

[4]Under the Contract, the Claimant was engaged as the Defendant's contractor to carry out "The design and construction of the Shell and Core, Fit Out and External Works of a new build student residential, private residential and affordable housing development" ("the Works").

[5]The Contract value of the Works was £24,087,347.50 plus VAT.

[6]Clause 9.2 of the Contract provides:

“If a dispute or difference arises under this Contract with either Party wishes to refer to adjudication, such Party may elect to adopt clause 9.2A. In the absence of such election, the Scheme shall apply, subject to the following: .1for the purposes of the Scheme the Adjudicator shall be the person (if any) and the nominating body shall be that stated in the Contract Particulars [the Contract Particulars confirm the nominating body is "The Royal Institution of Chartered Surveyors"]; .2where the dispute or difference is or includes a dispute or difference relating to clause 3.13.3 and as to whether an instruction issued thereunder is reasonable in all the circumstances: .1the Adjudicator to decide such dispute or difference shall (where practicable) be an individual with appropriate expertise and experience in the specialist area or discipline relevant to the instruction or issue in dispute; .2if the Adjudicator does not have the appropriate expertise and experience, the Adjudicator shall appoint an independent expert with such expertise and experience to advise and report in writing on whether or not the Instruction under clause 3.13.3 is reasonable in all the circumstances.”

The "Scheme" is defined in the Contract as "Part 1 of the Schedule to The Scheme for Construction Contracts (England and Wales) Regulations 1998" ("the Scheme"). Clause 9.2A of the Contract provided:

“In the event that the referring party so elects pursuant to clause 9.2, the TeCSA Adjudication Rules (version 3.2) shall apply to such dispute or difference.” .1the Adjudicator to decide such dispute or difference shall (where practicable) be an individual with appropriate expertise and experience in the specialist area or discipline relevant to the instruction or issue in dispute; .2if the Adjudicator does not have the appropriate expertise and experience, the Adjudicator shall appoint an independent expert with such expertise and experience to advise and report in writing on whether or not the Instruction under clause 3.13.3 is reasonable in all the circumstances.”

THE DISPUTE

[7]The dispute relates to the Claimant's entitlement to payment following the Defendant issuing its clause 8.7.4 statement under the Contract on 16 December 2022.

[8]An adjudication decision was issued by Mr Lorne Alway dated 15 December 2022, which decided that the Defendant was required to issue its clause 8.7.4 statement. The Defendant issued its clause 8.7.4 statement on 16 December 2022 (the "Clause 8.7.4 Statement").

[9]Clause 8.7.4 provides a mechanism for determining, in the event the Claimant became insolvent and the Contract was terminated, whether sums were due to / owed by the Defendant to the Claimant once the Works were completed by the Employer. It required the Defendant to prepare a "statement" setting out: “.1the amount of expenses properly incurred by the Employer, including those incurred pursuant to clause 8.7.1 and, where applicable, clause 8.5.3.3, and of any direct loss and/or damage caused to the Employer and for which the Contractor is liable, whether arising as a result of the termination or otherwise; .2the amount of payments made to the Contractor; and .3the total amount which would have been payable for the Works in accordance with this Contract;”

.2the amount of payments made to the Contractor; and

[10]Clause 8.7.5 thereafter confirmed: “If the sum of the amounts stated under clauses8.7.4.1 and

8.7.4.2 exceeds the amount stated under clause 8.7.4.3, the difference shall be a debt payable by the Contractor to the Employer or, if that sum is less, by the Employer to the Contractor."

[11]The Clause 8.7.4 Statement provided the following figures:a. Clause 8.7.4.1£226,280.00

b. Clause 8.7.4.2£24,598,740.50

c. Clause 8.7.4.3£24,825,020.50 The first two figures added together total the third. The effect being that the Claimant had been paid the full amount it was owed under the Contract by the Defendant and that no further sums were due to either party.

[12]The Claimant accepted the figures set out at clause8.7.4.1 and 8.7.4.3. It did, however, dispute the

8.7.4.2 figure. The Claimant asserted that only £22,820,932.50 had been paid to them. The effect of this was that the sum of the clause 8.7.4.1 and clause 8.7.4.2 figures was less than the clause

8.7.4.3 figure and, as such, the sum of £1,551,528 exclusive of VAT was owed to the Claimant pursuant to clause 8.7.5.

[13]The Defendant refused to pay the balance due and owing to the Claimant. Accordingly, a dispute (as defined by section 108(1) of the Construction Act 1996) arose between the parties. THE ADJUDICATION

[14]The Claimant gave notice of its intention to refer the dispute to adjudication, by a notice dated 9 May 2023 sent to the Defendant on 15 May 2023 ("the Notice"). By way of the Notice the Claimant sought relief in the following terms: “9. Midas respectfully seeks the following decisions:(a) the clause 8. 7.4 statement issued by Harmsworth is wrong in that it states the correct figure for the purposes of clause 8.7.4.2 is £24,598,740.50;

(b) Midas has not been paid £24,598,740.50, it has only been paid £22,820,932.50;

(d) Harmsworth is therefore indebted to Midas, pursuant to clause 8.7.5, for the sum of £1,551,528 exclusive of VAT and interest; and

(e) Harmsworth should pay the Adjudicator's costs and expenses.

[10]Midas respectfully requests a direction that requires Harmsworth to pay forthwith to Midas any sums that the Adjudicator decides are due and payable.

[11]Midas respectfully requests the Adjudicator to provide reasons for the Adjudicator's decision.”(a) the clause 8. 7.4 statement issued by Harmsworth is wrong in that it states the correct figure for the purposes of clause 8.7.4.2 is £24,598,740.50;

(b) Midas has not been paid £24,598,740.50, it has only been paid £22,820,932.50;

(d) Harmsworth is therefore indebted to Midas, pursuant to clause 8.7.5, for the sum of £1,551,528 exclusive of VAT and interest; and

(e) Harmsworth should pay the Adjudicator's costs and expenses.

[15]On 18 May 2023, the Claimant referred the dispute to the adjudicator, Mr Lorne Alway ("the Adjudicator"), by way of a referral notice, dated 18 May 2023, issued in accordance with the Scheme.

[16]No election was made under clause 9.2A and, as such, the adjudication was governed by clause 9.2 and the Scheme.

[17]By a decision dated 22 June 2023 (the "Decision"), the Adjudicator decided that the Defendant was to pay the Claimant the sum of £1,551,528.00 excluding VAT and interest (the "Sum") within seven days of the date of the Decision.

[18]The Defendant failed to comply with the Decision and did not pay the Sum within the 7 days ordered, or at all.

[19]The Adjudicator's total fees and expenses for deciding the Dispute were in the sum of £22,950.00 (£19,125.00 plus VAT). The Adjudicator decided that, whilst the Claimant was to pay the Adjudicator's total fees, the Defendant was ultimately liable for them and was liable to reimburse the Claimant for them.

[20]The Claimant paid the Adjudicator's fees of £22,950 on or around 28 June 2023. For the avoidance of doubt, the Defendant has reimbursed the Claimant for the Adjudicator's fees.

[21]By an order dated 15 January 2025, amended pursuant to rule 40.12 of the Civil Procedure Rules Mr Justice Waksman ordered that the case was suitable for a hearing by a Deputy High Court Judge and amongst other matters, he ordered that there should be a remote hearing at 2pm on 25 February 2025.

[22]The Claimant ("Midas") is a company in administration with no notice of distribution issued. Midas seeks enforcement of an Adjudicator's Decision subject to a stay with proposed conditions.

[23]The Administrators have engaged Pythagoras Capital ("Pythagoras") to collect debts owed by the Defendant ("Harmsworth”). Midas had two Building Contracts with the Defendant. The first Building Contract (to which the enforcement claim relates) was for a Project in Unity Street ("Sanctus Project"). Midas brought and succeeded in a First Adjudication for a declaration that Harmsworth was obliged to issue a statement of payment under clause 8.7.4 of the Sanctus Contract. Midas brought a Second Adjudication seeking a finding that the clause 8.7.4 statement issued by Harmsworth wrongly stated the sums paid to Midas and if this were corrected Harmsworth owes Midas £1,551,528.00 under the Sanctus Contract. The Adjudicator decided that Midas is owed the sums claimed. When Midas asked for engagement on the conditions for enforcing this Decision (including security) Harmsworth averred that no payment was due because Harmsworth was owed sums by Midas for alleged defects under a separate Print Hall Contract. Midas then brought an adjudication ("Print Hall Adjudication") seeking a finding that no sums are owed by Midas to Harmsworth under the Print Hall Contract. The Adjudicator decided in favour of Midas. Pythagoras then asked Harmsworth to agree to enforcement of the Second Adjudication subject to a stay of three months in which Harmsworth can commence Final or Overturning Proceedings. No such agreement was forthcoming nor did Harmsworth respond by way of any indication of required security.

[24]There is no question that the Claimant has a valid Adjudicator's Decision in its favour that the Claimant is owed the sum of £1,551,528.00. That Decision relates to Works carried out more than three years ago now.

[25]The Defendant raises two points:(1) there is inadequate security for the cost of final proceedings that Harmsworth may bring upon enforcement;

(2) the enforcement claim is champertous because it is in breach of the Damages Based Agreement Regulations 2013 and is therefore an abuse of process. The second ground has not been pursued today with any force and I find that the agreement is not champertous given how the agreement has been amended through the course of these proceedings.

[26]I was referred to the following passages from His Honour Judge Partfitt’s judgment in Styles & Wood Limited (in administration) v GE CIF Trustees Limited

[2020] EWHC 2694 (TCC)

: “14. The main issue between the parties is whether or not the claimant's offer of an ATE policy covering, at the moment at least, £200,000 worth of potential arbitration costs that might be ordered in favour of the defendant is reasonable or not. In that context, Mr Hussain identified six points. I shall go through them and make my findings in relation to them as I go.

[15]The first is that the mechanisms provided for under the relevant contract would lead to an arbitration process that is designed expressly within the applicable arbitral rules to be cost effective and flexible and one notes in particular that either party could make an application for a costs' capping order if it was considered to be appropriate and also that the arbitrator's powers to order costs are limited in an equivalent way to those that are familiar from normal civil litigation; potential costs recovery is of a reasonable amount in relation to costs reasonably incurred. I agree with the points that Mr Hussain made in that respect, that that is both relevant and material to the assessment of the level of costs' protection to be provided as a result of an application of Meadowside principles in the present situation.

[16]The second point is in relation to the work that has already been done. It is obvious and reflected in Waksman J's approach that there is a considerable difference in principle between the adjudication process and the arbitration process or litigation process. It is indeed necessary to re-run the points. Nothing that is said or done in the adjudication is either relevant of itself nor is it binding in terms of findings in the context of litigation or arbitration. But that does not seem to me to answer or to address the point that Mr Hussain is making on behalf of the claimant which is that there is a considerable amount of work that has already been done in the context of the adjudication which will not need to be re-done in the context of the arbitration, simply because the underlying factual material, the factual evidence that needs to be gathered, is at least equivalent even if, as Mr Crangle has emphasised, the arbitration will go further in terms of evidential scope than the adjudication.

[17]It seems to me that Mr Hussain's point is a good one. The defendant in the adjudication put forward substantial expert analysis and evidence, both in relation to the delay issues and in relation to quantum issues. They spent in the broadest terms I think about £280,000 or so of costs. It seems to me that that cost is going to lead to a costs' saving so far as concerns the arbitration process even in circumstances where the evidential arbitration process is going to go further and involve additional costs than that in the adjudication. It is a very simple point; the evidence that is there already, is there already and it is also, Mr Hussain reminded me, not going to be the case that those adjudication costs will become recoverable costs in the context of an arbitration. That would cut across the principle that costs incurred in relation to the adjudication are not recoverable.

[18]The defendant has substantial work product already in hand. It will at the very least be able to build on that and since the cost of it was so substantial, one assumes that that which they are building on will be equally substantial and of benefit insofar as running their proposed arbitration case. …

[28]That brings me quite briefly to the final two points made by Mr Hussain before I get on to the few other points of detail raised by Mr Crangle, and that is whether or not it is appropriate to look at the level of costs' protection to be provided as reduced by the likely amount to be recovered, so it will be the 60 per cent and it seems to me obvious that that must be right. No party is entitled in the context of security for costs' type orders to a complete indemnity in respect of their costs; it is always protection in relation to such costs' order as might be or is going to be ordered on the premise that the costs' protection becomes relevant.” I agree with and I will adopt this analysis and approach.

[27]The court in assessing the amount of security must look carefully at the actual issues to be determined in final proceedings and reject a generic estimate of likely costs divorced from the actual issues. The court will also give credit for work already done in the adjudication and elsewhere and how this means less costs are required than when a matter is considered, and pleaded afresh with witness and expert evidence being gathered for the first time (see Styles v Wood at paragraphs 16 to 18 and again Styles v Woodat paragraph 28). The Court will allow security for the likely recoverable costs rather than likely incurred costs. This is how the sum for security for costs is set generally even outside the context of security as a condition for enforcement of the adjudicator's decision. It is also submitted by the Claimant that the courts will be receptive to an incremental approach to adjust or increase security as required (see Styles v Wood at paragraphs 30 to 31.

[28]Camille Slow KC who appears on behalf of the Defendant makes three general points of principle and/or criticisms of the approach adopted by the Claimant. She complains that the assertion there has been a lack of engagement between the parties is wrong and I agree with her analysis, and I do not think the Defendant can be criticised for their response to this application given the way in which the information has been provided on a step by step basis. Ms Slow also says that it is wrong to suggest tactical games are being played. Again, I think she is correct that no games are being played. Her clients have provided a robust objection to the security which has been offered.

[29]Moving on to her third and major criticism of the approach adopted by the Claimant, it is contended what they are trying to do is stage the proceedings and not stage the security and they are trying to constrain and restrain the Defendant’s opportunity to advance their claims as they see fit. At this stage I think it is unsafe and unfair for me to case manage these proceedings and stage the security on the basis that the Claimant suggests so that the Sanctus claim must go first and then only followed by the Print Hall Works claim.

[30]Mr Justice Constable in Meadowside Building Developments Ltd (in Liquidation) and 12-18 Hill Street Management Company Ltd

[2019] EWHC 2651 (TCC)

observed that: “84. As near as possible, the safeguards must seek to place the responding party in a similar position to if the company was solvent. I recognise that it is unlikely that this would be wholly achieved. First, it is likely that should a responding party want to pursue its cross-claim in further litigation, it would likely be solely for the purposes of seeking repayment of any sum awarded, and it would be unlikely to benefit from a finding that it was the true creditor in the insolvency (other than to the extent of recovery of sums paid pursuant to the adjudication). Second, there would be an element of irrecoverable costs. Whilst this is the ordinary exigency of any litigation, this downside is more acute in litigation where the upside of success is limited by reason of the opposing parties' insolvency. Third, the requirement imposing a time limit in which the responding party must take steps to overturn the adjudication may involve a party bringing a claim earlier than the Limitation Act 1980 might otherwise have required it.

[85]However, against this I bear in mind that a liquidator has a statutory obligation to collect the companies' debts. Ordinarily, a party to a construction contract has the right to adjudicate and retain sums, following a successful adjudication, pending any action by the other side to recover the sums. For the reasons set out above, this has some real practical utility that goes beyond cashflow. It might also be thought that (if the third party funding business model is successful) in the small number of cases identified for pursuit in this manner in which the funder is putting up security and accepting liability for an adverse costs order in any subsequent litigation, there is a reasonable chance that the company in liquidation's entitlement to payment is in, fact, a good one which, despite its merits, would otherwise be impossible or difficult for the liquidator to realise. It is commercially unrealistic to suggest that if the liquidator or its funder has faith in the claim, they should simply fund the case to litigation or arbitration rather than adjudication. Irrespective of liquidation, parties use their contractual and statutory rights to adjudicate as a means of enforcing their contractual rights when they would not contemplate the risk and expense of litigation. Providing adequate safeguard to balance the interests of the parties are put in place because of insolvency, there would seem to be little justification in removing the tool of adjudication, which has generally proved very effective in allowing parties to resolve their disputes without the need to burden the Courts, from liquidators. It may also be that the existence of funding itself is dependent upon the ability to adjudicate: for example, the provision of ATE insurance is likely to be easier and cheaper following a successful adjudication (where a provisional view on the merits has already been given by a third party), than where no such assessment has been undertaken.

[86]There is an obvious injustice if the company in liquidation is, in reality, the net debtor between the parties and enforces an adjudication award to the contrary with the practical effect of finality, and the loss of the responding party's security against its cross-claim. Yet, there is also injustice if the responding party is, in reality, the net debtor and by reason of the absence of funds available to a liquidator to pursue debtors, is able to evade its contractual liabilities to assess the sum due and pay it. It receives an undeserved windfall. In the modem world, it is common place for liquidators to approach third party funders. This is considered further below in relation to the question of champerty. Setting that question aside for present purposes, the general position is that the Courts ought, for public policy reasons, to support i liquidators and their agents in collecting sums due to companies in liquidation. As Mr Justice Smith remarked, in Absolute Living it is in the public interest that liquidators proceed in a manner that is generally uninhibited in deciding how to frame and fund actions to collect sums thought to be due and owing. It is clear that Bresco places important limits on the use of adjudication in the ordinary case to safeguard the rights of the debtor(/creditor); but where the central rationale for incompatibility is dealt with satisfactorily by the provision of security for the awarded sum and costs, the balance in my view should shift to one which permits a party to utilise the statutory and contractual entitlements at its disposal to pursue its right to payment. The fact that the onus then shifts to the responding party to bring its proceedings within a reasonable period of time if it wishes to overturn the adjudicator's decision is of itself unremarkable and a consequence of the intention to strike a balance between the rights of the two parties.” I agree with that analysis.

[31]As it was pointed out in Meadowside, as near as possible, the safeguards must seek to place the responding party in a similar position to if the company was solvent. I recognise that it is unlikely that this would be wholly achieved but it certainly should be the aim of the Court insofar as practicable. In those circumstances, I reject any suggestion that security be staged.

[32]As Camille Slow KC powerfully submitted for the Defendant. “As Constable J noted in Meadowside (para 84), where safeguards are put in place for the solvent party::

"[A]s near as possible, the safeguards must seek to place the responding party in a similar position to if the company was solvent."

It is clear that this imposed staging of the bringing of claims would be purely a function of Midas's insolvency. It is clearly "possible" to avoid imposing these staging restraints on Harmsworth. That can be achieved by it providing security now sufficient to permit Harmsworth to bring all its claims as it sees fit (subject to timescales). However Midas does not wish to, or cannot, provide this level of security now. The practical purpose of the proposed litigation can only be to overturn the adjudication decisions, since there is no prospect of any money recovery for Harmsworth. Thus, Harmsworth must be permitted to advance the claims which it considers might best achieve that objective, which would include permitting it to advance the Print Hall claim first, at the same time or to run both claims as part of one action, if so advised. If Harmsworth loses the Sanctus litigation it is likely to be ordered to pay the costs of those proceedings, even if the ultimate objective of overturning the adjudication Decision is achieved in the fullness of time. A party being required to expend substantial sums on court proceedings cannot be deprived of the autonomy to determine the best way to advance its arguments. The overall costs of the proceedings which Midas invites upon itself could well equal or exceed the value of the Adjudication Decision that Midas seeks to enforce. These cannot and should not be considered an ancillary concern which it is appropriate to overlook so as to limit the cost risk Midas must run in the first instance. The proposed deferral does so much more than 'stage' the provision of security. It seeks to defer the risk Midas faces of the Print Hall claim succeeding. It also defers Harmsworth's right to defend itself by reference to the Print Hall claim. It would leave the judgment hanging over Harmsworth for a period of years, during which time Midas could seek to use the threat of that judgment to push for a settlement despite Harmsworth having a cross claim which it contends would defeat that judgment but which it is not realistically permitted to advance. This clearly puts it in a significantly worse position than if Midas were solvent.”

[33]I consider that it would be wrong and unfair for the Claimant to dictate by insisting on the staging of any security how the Defendant should advance its claims against the Claimant. I accept and endorse the submissions of Camille Slow KC as set out above.

[34]What is more difficult is to assess the amount of security which should now be provided. Matters are made slightly more clear by what is set out in paragraph 83 of the Defendant's written submissions:

“Harmsworth's right to come back to court to obtain further security is an important safeguard against the inadequacy of any projections made now. However, it is not good reason for providing knowingly inadequate security at this stage.”

[35]I will do my best on the information and evidence which has been made available to me to assess what is the appropriate security which should be provided now. I am comforted that Harmsworth do have the right to come back to court to obtain further security if I underestimate the amount that is appropriate to be ordered at this stage.

[36]I have been helped very much by the parties' solicitors, particularly by Mr Gerstein’s, the Defendant’s solicitor, witness statement. In particular at paragraph 84 where he states: “84. Mr McMahon exhibits a letter from Pythagoras dated 14 November 2024 [GRM1/169-170] purportedly in support of Mr McMahon's assertions on security for costs. However, Pythagoras merely references the provision of an "appropriate insurance policy for £100,000" without any evidence or explanation as to how the amount had been calculated. Patently, the sum of £100,000 will self-evidently not be sufficient to cover the costs (up to and including trial) of complex High Court proceedings involving the interpretation and construction of contracts, rectification etc. Indeed, in JA Ball HHJ Kramer calculated (after allowing a 20% reduction ''for challenges to the budget") that the amount of costs at stake (for a less complex dispute) were in the order of at least £270,000. In my experience, the costs budget for this claim alone will exceed £560,000 and a substantially higher figure (in excess of £760,000) will be required for the Print Hall dispute (given the requirement for expert evidence in the fields of architecture and fire engineering). Although costs budgets can only (reasonably) be prepared after the close of Statements of Case (as it is only then that the actual scope of a dispute can be ascertained), I refer to draft indicative costs budgets for the Sanctus Claim [RDG1/472] and Print Hall [RDG1/473] which have been prepared based on my experience with similar disputes. The costs budgets assume two separate Part 7 claims as the extent of any overlap is limited to the identities of the parties. The claims arise from different contracts, relate to different properties, have different factual matrices, different causes of action and require different technical expertise. Even if it were considered appropriate to deal with these two (otherwise) unrelated disputes in one action the costs savings would be limited given the limited overlap of subject matter.” and by his two costs estimates which have been produced totalling for the Sanctus claim a sum of £568,616 and for the Print Hall claim the sum of £767,105.

[37]A slightly more detailed assessment has been provided in what I regard as a very helpful witness statement from Holly Howarth, the Claimant’s solicitor.

[38]Holly Howarth explains as follows: “4.8 The Defendant's estimated costs of determining what sums are due for the Sanctus Works 4.9 The Defendant's estimated costs are based on proceedings being started and run to an evidential trial under CPR 7. For the reasons set out above, CPR r. 8 or r. 24 is the more suitable approach. 4.10 The next point to consider is the hourly rates that have been included in the draft cost budget, which are very high. The rates claimed are as follows:(a) Grade A fee earner: £750

(b) Grade B fee earner: £390

(c) Grade C fee earner: £365 4.11 The claimed rates are far in excess of the Solicitor's guideline hourly rates published by the HM Courts & Tribunals Service. The latest rates, published on 1 January 2025, are, for a firm based in band London 2: (a) Grade A fee earner: £413 (b) Grade B fee earner: £319 (c) Grade C fee earner: £269 4.12 In my view, the London 2 band is the most suitable band to place the Defendant's solicitor's firm and its estimated costs, into. I say this because it is located within the relevant postcode applicable to the London 2 banding and any claim brought by the Defendant would not be 'very heavy commercial and corporate work by centrally based London firms'. As such, band London 1 would not apply. 4.13 It is acknowledged that the court can allow itself to depart from the guidelines in "substantial and complex litigation". In my opinion, this claim does not fall into that category and where a party claims rates that are in excess of the guideline hourly rates, "a clear and compelling justification must be provided." 4.14 In my experience and considering my proposal that any claim should be brought under CPR 8, the guideline hourly rates and the rationale set out in Styles & Wood, I have set out below my estimate of the costs that the Defendant would incur in bringing the proposed proceedings in respect of the Sanctus Decision. The below is based on the guideline hourly rates for solicitors and a 1-day trial. Draft Costs budget of Claimant In the: Parties: Claim number: Technology & Construction Court, Business and Property Courts of England and Wales Harmsworth Pension Funds Trustees Limited -v- Midas Construction Limited (in Administration) Sanctus Claim - CPR8 Work done/ to be done Estimated Total revised(£) Grade A Grade B Grade C Disbs (£) (Counsel/Experts) Revised Time costs revised(£) Pre-action costs Assumes no Pre-Action Process Issue /statements of case 5.00 20.00 6.00 £10,626.00

£10,059.00

£20,685.00 CMC 0.00 0.00 0.00 £0.00

£0.00

£0.00 Disclosure 2.00 5.00 10.00 £2,500.00

£5,111.00

£7,611.00 Witness statements 5.00 5.00 5.00 £2,500.00

£5,005.00

£7,505.00 Expert reports 0.00 0.00 0.00 £0.00

£0.00

£0.00 PTR 0.00 0.00 0.00 £0.00

£0.00

£0.00 Hearing preparation 8.00 20.00 30.00 £25,000.00

£17,754.00

£42,754.00 Hearing 6.00 6.00 4.00 £10,000.00

£5,468.00

£15,468.00 ADR / Settlement discussions 3.00 10.00 10.00 £5,000.00

£7,119.00

£12,119.00 Contingent cost A: Mediation 0.00 0.00 0.00 £0.00

£0.00

£0.00 Contingent cost B: both incurred costs and estimated costs) £55,626.00

£50,516.00

£106,142.00 4.13 In the above cost estimate, I have assumed the following, which I consider to be reasonable and fair given my professional experience: (a) Generally: I have applied the guideline hourly rates for solicitors, based on what I say at paragraphs 4.11 to 4.13; (b) Issue/Statements of Case: (i) The claimant is required to file and serve written evidence on which it relies at the same time that the claim form is issued and filed. This evidence, in my opinion, will not be overly detailed. The only point in dispute is likely to be the terms and effect of the Novation Agreement. (ii) I have allowed 31 hours of solicitor time and £10,000 or 23 hours of counsel's time. (iii) On the basis that any reply evidence served by the Defendant is, again, likely to be short and confined to one issue, I consider that the time estimated in the above table to be reasonable. (iv) £626 has been allowed for the cost of issuing a High Court claim for a non-monetary judgment. (c) Witness statements: (i) I do not consider that witness statements will be required because any claim brought by the Defendant will more than likely be confined to legal issues only. However, I have allowed 15 hours of solicitor time and £2,500 of counsel's time in the event that witness statements are required, If they are, in my experience, I can see them extending to no more than a couple of pages.

(d) Disclosure: (i) Again, I do not consider that disclosure will be required but, I have allowed 17 hours of solicitor time and £2,500 hours of counsel's time against this stage. (ii) I would expect disclosure to be limited to no more than 100 pages and that no disclosure platform service would be required.

(e) Preparation for hearing and the hearing (i) I estimate that the hearing in this matter would be listed for no longer than one day and that the Defendant would be represented in court by counsel and a Grade B solicitor. In the interests of reasonableness however, I have allowed a total of 14 hours at the Grade A rate, 26 hours at the Grade B rate and 34 hours at the Grade C rate. This is in addition to £35,000 for counsel's costs. In my experience, this is a reasonable allowance for a CPR 8 hearing. 4.16 In my opinion, I would further reduce the estimated costs on the basis that significant work has already been undertaken in the course of the adjudication on the issues that would be carried to any final proceedings. This would mean that the costs will be significantly less compared to a matter where counsel and solicitors are turning to a matter afresh - thereby the hours (and associated costs) of pleading, witness evidence and preparation for the hearing should be discounted by 20% on a generous estimate. This would reduce the estimated costs above by £14,188.80, resulting in a total of £91,953.20. 4.17 Thereafter applying a 60% assessment of these costs one reaches the total figure of £55,171.92 for likely recovery of costs if the Defendants were to succeed in their claim in full. 4.18 Security should only be ordered for the CPR 8 proceedings to decide the sums due for the Sanctus Works at this stage 4.19 In my professional opinion, if the Defendant were to commence final proceedings and effective case management in light of the Overriding Objective, they would first decide the question of what sums are due for the Sanctus Works because (a) this can properly be decided in a short timeline with limited costs (given the only dispute is what credit is to be given for sums paid for the Works), and (b) if the Defendant were to succeed in its position, then there would be need to consider a cross claim for the Print Hall works. If the Defendant lost in the Part 8 claim, further security for the next stage of proceedings can be ordered or released. I have given, for the Court's convenience, my view of what the likely recoverable costs for such a further stage would be below. It is not necessary for the Defendant to have security for this further potential stage of final proceedings at this stage. Nor is it right for the Claimant to suffer the prejudice of providing security for this next stage, prematurely not least because such security may not be needed, or not be needed for some time. 4.20 Costs of CPR 7 proceedings for the Print Hall cross claim 4.21 Applying the above-mentioned criteria to a cross claim for defects in the Print Hall Works, I note the following: (a) The issues involved are discrete - they involve identified alleged defects in the work, (b) These defects are already the subject of time and attention in the adjudication including expert evidence so that the costs of final proceedings should be suitably discounted - Mr Gerstein offers no detail of work done and invoiced for the adjudication phase. Being generous to the Defendant, I have applied a discount of 20% for the value of work already done and how this will save costs going forward, and (c) This then has to be assessed at 60%. 4.22 I set out below my considered assessment of likely costs of the Print Hall claim. Draft Costs budget of Claimant In the: Parties: Claim number: Technology & Construction Court, Business and Property Courts of England and Wales Harmsworth Pension Funds Trustees Limited -v- Midas Construction Limited (in Administration) Print Hall Claim Work done/ to be done Estimated Total revised (£) Grade A Grade B Grade C Disbs (£) (Counsel/ Experts) Revised Time costs revised(£) Pre-action costs Assumes no Pre-Action Process Issue /statements of case 10.00 25.00 12.00 £15,000.00

£15,333.00

£30,333.00 CMC 4.00 20.00 25.00 £7,500.00

£14,757.00

£22,257.00 Disclosure 5.00 20.00 40.00 £5,000.00

£19,205.00

£24,205.00 Witness statements 10.00 25.00 40.00 £10,000.00

£22,865.00

£32,865.00 Expert reports {Architect and Fire Engineer) 10.00 30.00 30.00 £70,000.00

£21,770.00

£91,770.00 PTR 2.00 5.00 10.00 £8,000.00

£5,111.00

£13,111.00 Trial preparation 8.00 30.00 40.00 £80,000.00

£23,634.00

£103,634.00 Trial 25.00 30.00 30.00 £45,000.00

£27,965.00

£72,965.00 ADR / Settlement discussions 6.00 10.00 10.00 £5,000.00

£8,358.00

£13,358.00 Contingent cost A: Mediation 10.00 20.00 20.00 £10,000.00

£15,890.00

£25,890.00 Contingent cost B: both incurred costs and estimated costs) £255,500.00

£174,888.00

£430,388.00 4.23 In the above cost estimate, I have assumed the following, which I consider to be reasonable and fair given my professional experience: (a) Generally: I have applied the guideline hourly rates for solicitors, based on what I say at paragraphs 4.11 to 4.13; (b) Issues/ Statements of Case: (i) this is a single issue defect, namely that the spandrel panels as installed were not compliant with the Building Regulations 2010; (ii) any further claimed defects have already been explored in the Adjudication in the Defendant's Response [Exhibit RDG1 Page 317 at Page 324-326] and Rejoinder [Exhibit RDG1 Page 374 at Page 382 - 386]; (iii) quantum is crystallised on the Defendant's case, based on a concession given to the third-party buyer of the asset [Exhibit RDG1 Page 327]; (iv) I therefore consider that the pleadings will be limited and have allowed 26 hours for solicitor time in respect of the particulars of claim and 21 hours in respect of the reply. (v) I have based counsel's fee estimate on an hourly rate of £425 for a senior junior barrister, which equates to a little over 35 hours for preparing the particulars of claim and drafting a reply. (vi) I have not included a court fee in the estimate because it is not known whether the Defendant will seek a monetary or non-monetary judgment, at this stage. (c) CMC: (i) I have estimated that the CMC would be listed for no more than 2 hours and will take place remotely, and that the Defendant (as the claimant in the proceedings) will be preparing the initial drafts of the case memorandum, list of issues and CMC bundle. (ii) I have allowed 4 hours of Grade A time which I consider reasonable as, in my experience, the majority of the procedural work will be undertaken between a Grade B and Grade C fee earner. I have allowed a total of 45 hours for the Grade B and Grade C fee earner, which I considerable sufficient to undertake the procedural tasks required ahead of and to attend a CMC. I would not expect a Grade A fee earner to attend the CMC. (iii) I have allowed £7,500 in respect of counsel's costs. This equates to a little over 17.5 hours, which in my experience, is reasonable. (d) Disclosure: (i) Given the limited issues in dispute, I consider that Model B disclosure would be the most appropriate model for disclosure to be based on. I do not consider that extended search based disclosure would be required. (ii) I do not consider that disclosure would extend to more than 1500 pages of documents (to include both the claimant's and defendant's disclosure). In my experience, where there are limited documents, a document hosting platform is not required. (iii) I have allowed a total of 65 hours for the disclosure exercise, which I consider reasonable. (iv) I have allowed £5,000 for counsel's costs of the disclosure process, which I expect will be almost entirely undertaken by the solicitors instructed. This equates to just under 12 hours of counsel's time. (e) Witness statements: (i) I have based the estimate on both parties calling two witnesses of fact and that the witness statements will be limited to a small number of discrete issues. As is set out at paragraph 2.2 of the Appendix to Practice Direction 57AC, in trials in the Business and Property Courts, often many matters of fact do not require witness evidence, either because they are common ground or because witness testimony adds nothing of substance to the disclosed documents. (ii) Given that the issues in dispute between the parties will largely be confined to technical issues, I do not expect that the witness statements of fact will require a significant amount of work. (iii) I have allowed a total of 75 hours of solicitor time for witness statements of fact which, in my experience, I consider to be sufficient. (iv) I have allowed £10,000 for counsel, which equates to 42.5 hours of counsel's time.

(f) Expert Reports: (i) The Defendant has received a "Preliminary Expert Report" and "Supplemental Expert Report" [Exhibit RDG1 Page 390] from Mr Richard Morton in this respect of the issues that will likely be in dispute. Further the supplemental evidence served by the Defendant is written with the benefit of seeing the Claimant's quite detailed evidence. (ii) Significant work has therefore already been undertaken in respect of expert evidence and it is assumed that the Defendant will retain Mr Morton and appoint him as its CPR 35 expert in any proceedings. (iii) £50,000 has been allowed for the cost of obtaining a CPR 35 expert report which, considering the work that has already been undertaken by Mr Morton, is considered to be reasonable. (iv) I have allowed £20,000 for counsel's involvement for this stage. Given the limited involvement legal representatives can have in the provision of expert evidence. I refer to paragraph 13 of the TCC Guide in this respect. (v) I have allowed a total of 75 hours of solicitor time in respect of expert reports.

(g) PTR (i) I have based the estimated costs on a one hour PTR, to take place remotely. However, given that a PTR is generally only held if the case is complex or the trial is expected to be lengthy, it is, in my view, reasonable to consider that there would be no need for a PTR. (ii) If the PTR is necessary, it is not expected that the PTR will deal with any substantive issues, nor that any further directions will be required. (iii) I have estimated that a total of 17 hours of solicitor time will be more than sufficient. I have estimated counsel's fee to be £8,000, which is over 18 hours of counsel's time.

(h) TRIAL PREPARATION

(i) I have based my estimate on the assumption that the Claimant will undertake the preparation of the trial bundle and arrangements for any trial transcripts (albeit I do not consider this case would require a transcript to be produced). (ii) I have allowed 40 hours for a Grade C fee earner, who I would expect to carry out the day to day work in preparing for the trial, 30 hours for a Grade B fee earner and 8 hours for a Grade A fee earner. I consider this to be a reasonable estimate. (iii) I have allowed £80,000 for counsel's costs of preparing for trial. This equates to 188 hours of counsel's time. (i) TRIAL (i) In my experience, I can see no reason why these proceedings would require a trial period longer than 3 days. I have therefore based my estimate on a 3-day trial taking place, to accommodate 4 witnesses of fact and two experts giving evidence. (ii) I have estimated that counsel's brief fee for each day of trial will be no more than £15,000, which in my experience, is a generous figure. 4.24 Again, I would further reduce the estimated costs on the basis that significant work has already been undertaken on the issues that would be carried to any final proceedings and thereby the hours (and associated costs) of pleading, witness evidence, expert evidence and preparation for trial should be discounted by 20% on a generous estimate. This would reduce the estimated costs above by £51,720.40, resulting in a total of £378,667.60. 4.25 Thereafter applying a 60% assessment of these costs one reaches the total figure of likely recoverable costs to £258,232.80.” (a) Grade A fee earner: £750 (b) Grade B fee earner: £390 (c) Grade C fee earner: £365 (a) Grade A fee earner: £413 (b) Grade B fee earner: £319 (c) Grade C fee earner: £269 (a) Generally: I have applied the guideline hourly rates for solicitors, based on what I say at paragraphs 4.11 to 4.13; (i) The claimant is required to file and serve written evidence on which it relies at the same time that the claim form is issued and filed. This evidence, in my opinion, will not be overly detailed. The only point in dispute is likely to be the terms and effect of the Novation Agreement. (ii) I have allowed 31 hours of solicitor time and £10,000 or 23 hours of counsel's time. (iii) On the basis that any reply evidence served by the Defendant is, again, likely to be short and confined to one issue, I consider that the time estimated in the above table to be reasonable. (iv) £626 has been allowed for the cost of issuing a High Court claim for a non-monetary judgment. (i) I do not consider that witness statements will be required because any claim brought by the Defendant will more than likely be confined to legal issues only. However, I have allowed 15 hours of solicitor time and £2,500 of counsel's time in the event that witness statements are required, If they are, in my experience, I can see them extending to no more than a couple of pages. (i) Again, I do not consider that disclosure will be required but, I have allowed 17 hours of solicitor time and £2,500 hours of counsel's time against this stage. (ii) I would expect disclosure to be limited to no more than 100 pages and that no disclosure platform service would be required. (i) I estimate that the hearing in this matter would be listed for no longer than one day and that the Defendant would be represented in court by counsel and a Grade B solicitor. In the interests of reasonableness however, I have allowed a total of 14 hours at the Grade A rate, 26 hours at the Grade B rate and 34 hours at the Grade C rate. This is in addition to £35,000 for counsel's costs. In my experience, this is a reasonable allowance for a CPR 8 hearing. (a) The issues involved are discrete - they involve identified alleged defects in the work, (b) These defects are already the subject of time and attention in the adjudication including expert evidence so that the costs of final proceedings should be suitably discounted - Mr Gerstein offers no detail of work done and invoiced for the adjudication phase. Being generous to the Defendant, I have applied a discount of 20% for the value of work already done and how this will save costs going forward, and (c) This then has to be assessed at 60%. (a) Generally: I have applied the guideline hourly rates for solicitors, based on what I say at paragraphs 4.11 to 4.13; (i) this is a single issue defect, namely that the spandrel panels as installed were not compliant with the Building Regulations 2010; (ii) any further claimed defects have already been explored in the Adjudication in the Defendant's Response [Exhibit RDG1 Page 317 at Page 324-326] and Rejoinder [Exhibit RDG1 Page 374 at Page 382 - 386]; (iii) quantum is crystallised on the Defendant's case, based on a concession given to the third-party buyer of the asset [Exhibit RDG1 Page 327]; (iv) I therefore consider that the pleadings will be limited and have allowed 26 hours for solicitor time in respect of the particulars of claim and 21 hours in respect of the reply. (v) I have based counsel's fee estimate on an hourly rate of £425 for a senior junior barrister, which equates to a little over 35 hours for preparing the particulars of claim and drafting a reply. (vi) I have not included a court fee in the estimate because it is not known whether the Defendant will seek a monetary or non-monetary judgment, at this stage. (i) I have estimated that the CMC would be listed for no more than 2 hours and will take place remotely, and that the Defendant (as the claimant in the proceedings) will be preparing the initial drafts of the case memorandum, list of issues and CMC bundle. (ii) I have allowed 4 hours of Grade A time which I consider reasonable as, in my experience, the majority of the procedural work will be undertaken between a Grade B and Grade C fee earner. I have allowed a total of 45 hours for the Grade B and Grade C fee earner, which I considerable sufficient to undertake the procedural tasks required ahead of and to attend a CMC. I would not expect a Grade A fee earner to attend the CMC. (iii) I have allowed £7,500 in respect of counsel's costs. This equates to a little over 17.5 hours, which in my experience, is reasonable. (i) Given the limited issues in dispute, I consider that Model B disclosure would be the most appropriate model for disclosure to be based on. I do not consider that extended search based disclosure would be required. (ii) I do not consider that disclosure would extend to more than 1500 pages of documents (to include both the claimant's and defendant's disclosure). In my experience, where there are limited documents, a document hosting platform is not required. (iii) I have allowed a total of 65 hours for the disclosure exercise, which I consider reasonable. (iv) I have allowed £5,000 for counsel's costs of the disclosure process, which I expect will be almost entirely undertaken by the solicitors instructed. This equates to just under 12 hours of counsel's time. (i) I have based the estimate on both parties calling two witnesses of fact and that the witness statements will be limited to a small number of discrete issues. As is set out at paragraph 2.2 of the Appendix to Practice Direction 57AC, in trials in the Business and Property Courts, often many matters of fact do not require witness evidence, either because they are common ground or because witness testimony adds nothing of substance to the disclosed documents. (ii) Given that the issues in dispute between the parties will largely be confined to technical issues, I do not expect that the witness statements of fact will require a significant amount of work. (iii) I have allowed a total of 75 hours of solicitor time for witness statements of fact which, in my experience, I consider to be sufficient. (iv) I have allowed £10,000 for counsel, which equates to 42.5 hours of counsel's time. (i) The Defendant has received a "Preliminary Expert Report" and "Supplemental Expert Report" [Exhibit RDG1 Page 390] from Mr Richard Morton in this respect of the issues that will likely be in dispute. Further the supplemental evidence served by the Defendant is written with the benefit of seeing the Claimant's quite detailed evidence. (ii) Significant work has therefore already been undertaken in respect of expert evidence and it is assumed that the Defendant will retain Mr Morton and appoint him as its CPR 35 expert in any proceedings. (iii) £50,000 has been allowed for the cost of obtaining a CPR 35 expert report which, considering the work that has already been undertaken by Mr Morton, is considered to be reasonable. (iv) I have allowed £20,000 for counsel's involvement for this stage. Given the limited involvement legal representatives can have in the provision of expert evidence. I refer to paragraph 13 of the TCC Guide in this respect. (v) I have allowed a total of 75 hours of solicitor time in respect of expert reports. (i) I have based the estimated costs on a one hour PTR, to take place remotely. However, given that a PTR is generally only held if the case is complex or the trial is expected to be lengthy, it is, in my view, reasonable to consider that there would be no need for a PTR. (ii) If the PTR is necessary, it is not expected that the PTR will deal with any substantive issues, nor that any further directions will be required. (iii) I have estimated that a total of 17 hours of solicitor time will be more than sufficient. I have estimated counsel's fee to be £8,000, which is over 18 hours of counsel's time. (i) I have based my estimate on the assumption that the Claimant will undertake the preparation of the trial bundle and arrangements for any trial transcripts (albeit I do not consider this case would require a transcript to be produced). (ii) I have allowed 40 hours for a Grade C fee earner, who I would expect to carry out the day to day work in preparing for the trial, 30 hours for a Grade B fee earner and 8 hours for a Grade A fee earner. I consider this to be a reasonable estimate. (iii) I have allowed £80,000 for counsel's costs of preparing for trial. This equates to 188 hours of counsel's time. (i) In my experience, I can see no reason why these proceedings would require a trial period longer than 3 days. I have therefore based my estimate on a 3-day trial taking place, to accommodate 4 witnesses of fact and two experts giving evidence. (ii) I have estimated that counsel's brief fee for each day of trial will be no more than £15,000, which in my experience, is a generous figure.

[39]Holly Howarth has produced figures of £55,000 as an appropriate figure for security for the Sanctus claim and a figure for £258,000 for the Print Hall claim.

[40]I am in the invidious but not uncommon position that I think the figures advanced by the Claimant are too low and the figures advanced by the Defendant are too high. The figures advanced by the Claimant seem obviously too low when compared with the costs budgets they have provided for this half day hearing.

[41]Doing the best I can, I think appropriate security at this stage, and I emphasise this stage because all these matters can be reviewed when costs budgets are exchanged and case management hearings are heard, I think at this stage I will order security of £150,000 for the Sanctus claim and a figure of £400,000 for the Print Hall claim.

[42]I have increased the costs for the Sanctus claim because I think the issues are wider than those submitted by the Claimant.

[43]They are clearly going to have to go back through all three adjudications and there may well be witness evidence dealing with the timings of the various certificates and the administration order and also there may be witness evidence to provide the context of the rectification common mistake claim.

[44]With regard to the Print Hall claim, I know perhaps less about this claim but there does appear to be a likelihood of two liability experts and one quantum expert and therefore I think that the sums to be secured should be certainly a lot higher than the £232, 258 offered by the Claimant. The figure of £400,000 I consider is appropriate for a claim of this nature.

[45]In the circumstances having heard further submissions I invite the parties to agree an appropriate Order. MARTIN BOWDERY KC