Laing O’Rourke Delivery Limited v Shepperton Studios Limited

The parties have in been unable to agree certain issues as to interest and costs. I have received written submissions on these issues and provide my decision below.

Neither party addressed the issue of interest in their oral submissions before me prior to judgment. LOR’s written submissions in the Part 7 proceedings understandably sought to reflect the decision of the adjudicator.

The question is whether I should leave the adjudicator’s approach to interest unaltered or to apply interest in accordance with the contractual provisions between the parties, which would have a different result.

Given that both parties submit that the Court depart from the adjudicator’s approach in at least one respect I consider that it is open to the Court to depart from that approach to award interest on what the Court considers is the correct approach. I do not see any unfairness given both parties have addressed me on the same. Had it been necessary, as there are also Part 8 proceedings the Court could decide the sum properly due as interest as part of determining the proper sum due for payment cycle 45.

For those reasons the correct approach to interest is to reflect the contractual provisions, which are that VAT forms part of the contact price against which interest is to be applied. I note that this is consistent with the decision of Constable J in Pharos Offshore v Kenvor Morlift [2025] EWHC 2496 at [10-17].

This results in a total sum due of £3,838,392.77 including interest from the first clear day after publication of the Decision, 22 August 2025, until judgment on 16 March 2026.

Since drafting this part of the judgment, I have been advised that the parties have agreed interest on this basis. I retain my reasoning given it addresses circumstances in which it might be appropriate to depart from the adjudicator’s decision on interest.

SSL rightly accepts LOR should have its costs of the Part 7 proceedings.

As to the Part 8 proceedings, SSL did not succeed on any of the declarations sought. However, the reality of the Part 8 proceedings is that they concerned two issues of construction. SSL needed to succeed on both to obtain the consequential declaratory relief sought that, “Nothing is due from SSL to LOR in respect of AFP 45 by way of a periodic payment due on the date arising 7 days after AFP 45 was submitted ”.

It follows that the context to the Part 8 proceedings was SSL seeking declaratory relief that no sums were due to LOR.

Having regard to that context I cannot accept SSL’s submission that it was the winner in the Part 8 proceedings because LOR must pay/repay money. Firstly, at the time of my determination of the Part 7 and Part 8 proceedings, SSL had not paid any money. LOR has however recovered less on enforcement due to SSL’s success on one of the issues of construction.

As SSL notes, there were no offers from either side. The Part 8 proceedings were listed for April 2026, after the enforcement hearing, and were listed for a day. Given there was no certainty that the Court would be able to deal with the Part 8 proceedings at the same time as the enforcement proceedings, SSL could have protected its position on costs in the Part 8 proceedings by making an offer that reflected any success on the pay less issue. It did not do so. Similarly, had the Part 7 proceedings been determined prior to the Part 8 proceedings, LOR could have protected its position on costs by making an offer that reflected a liability in respect of a valid pay less notice.

It is important to keep the Part 7 and Part 8 proceedings separate and distinct for cost purposes. LOR has already recovered its costs for the Part 7 proceedings. In the Part 8 proceedings, there has been partial success by both parties. I do not consider that the result of the Part 8 proceedings, in LOR still receiving a substantial sum, means LOR is to be considered the winner. That is the approach to the Part 7 enforcement costs. Whether sums fell to be paid to LOR or repaid to SSL as a result of the Part 8 proceedings depended solely on when the Part 7 proceedings were determined. It follows that I do not consider that repayment by LOR to SSL had the Part 8 proceedings followed the Part 7 proceedings means that SSL should be viewed as the winner either.

I consider that neither party should be viewed as the winner in the Part 8 proceedings for the purposes of determining which party should recover its costs. Of the two central issues, each party succeeded on one and failed on the other. In that regard, I consider the appropriate order is to make an issues-based order reflecting success on those issues. On the facts of this case, each issue was of similar substance and complexity and so the appropriate order is for each party to recover 50% of its Part 8 costs.

Given that the Part 7 hearing took less than a half a day of court time and also disposed of the Part 8 proceedings, it is appropriate to summarily assess the costs of both sets of proceedings (CPR 44.PD paragraph 9.2(b) refers).

LOR and SSL provided statements of costs prior to the hearing on 3 March 2026. LOR’s costs were in the sum of £52,790.00 and SSL’s costs were in the sum of £95,925.00.

Following judgment being provided to the parties in draft there was further work undertaken by both parties at the request of the Court including providing further submissions on the issue of a stay, an issue on which LOR was also, ultimately, successful.

LOR has provided a further costs schedule reflecting its updated costs including post-hearing work. The overall total of the costs schedule has increased to £85,954.50.

As to those costs, a number of points are taken by SSL. I deal with them briefly.

I do not consider there should be any costs sanction for dealing with the Part 7 and Part 8 proceedings separately. They were separately listed and it was only through the significant pre-reading by the Court and the focussed nature of the submissions by Counsel that the Part 8 issues could be resolved in the shorter time available for the Part 7 hearing.

Having regard to the comparison of costs incurred, I see no basis to reduce LOR’s costs in respect of its costs up to and including the Part 7 hearing. I consider they are proportionate. A number of questions have been raised as to whether work was being undertaken which was duplicative or excessive. Whilst, on an exchange of submissions, those questions have not been able to be addressed, I do not consider a suggested lack of clarity as to what was undertaken is sufficient to justify any reduction having regard to the overall level of fees incurred to that date.

As to the costs post hearing and LOR’s updated Part 7 Schedule of Costs, SSL notes these have increased by £32,876 (62%) since the hearing concluded. Of this, Counsel fees have increased by approximately £19,300 which is greater than counsel’s brief for the hearing itself.

Whilst noteworthy, it is not an answer for LOR to say that the total claimed is still less than SSL’s costs which have not been updated to reflect post-hearing costs. Those costs did not arise for assessment.

SSL also highlights that LOR has incurred over £10,000 in further solicitors’ fees since the conclusion of the Part 7 hearing and compares this with LOR’s costs for commencing the Part 7 claim and preparing for the Part 7 hearing itself which were in the order of £16,000.

SSL’s starting point is that counsel’s brief fee should have included taking judgment and dealing with costs and consequential matters. No authority or guidance is cited to suggest this is an immutable rule, although in many cases that is likely to be the approach on assessment where no separate fee is agreed for work following receipt of a draft judgment.

In this case there were significant exchanges between counsel on the issue of a stay and further possible security. Further submissions were directed to the Court on the issue of the stay. Those submissions were of assistance in finalising the judgment. There were also costs incurred in liaising on the terms of a draft order, the consequential issues and reviewing drafts of the judgment. The progress on these matters similarly assisted.

The extent of the necessary exchanges and submissions went beyond what could be expected to be incidental to receipt of a judgment, even a judgment in draft. Nevertheless, I consider that the time taken and costs incurred to be unreasonable in amount and I reduce the costs by £10,000.00, representing a reduction to counsel’s fees of £8,000, taking into account work which could reasonably be expected on an enforcement case such as this, and a reduction to the solicitors’ costs of £2,000. The latter reduction reflects in particular the time reviewing the draft judgment and updating the schedule of costs. This results in an assessment of the Part 7 costs of £75,954.50.

For the reasons set out above the appropriate order is that each party recovers half of its Part 8 costs.

As to Part 8 costs, LOR highlights that its costs are substantially lower than SSL’s costs in that LOR’s costs total £52,790.00 whereas those of SSL total £129,499.00.

Again, whilst that comparison is not determinative, I consider LOR’s costs are proportionate and reasonably incurred. On that basis, I assess the Part 8 costs recoverable by LOR on the issues-based order as £26,395.00.

As to SSL’s Part 8 costs, these are well over twice those of LOR.

In support of the sums claimed SSL makes clear that the statement of costs only includes the costs actually incurred by SSL up to the March 2026 hearing and it does not, for example, include counsels’ brief fees for the separate Part 8 hearing, which will now be vacated. This reflects the position that SSL is not entitled to Part 8 costs beyond those incurred up to and including the March 2026 hearing.

SSL submits that the vast majority of its costs incurred are properly considered Part 8 costs. SSL highlights that from the outset its Part 8 arguments were the only defence to enforcement and consistent with that, minimal costs were incurred in relation to (a) the necessary procedural steps in the Part 7 proceedings and (b) arguing in the Part 7 claim whether paragraph 9.4.5 of the TCC Guide applied to the present facts, on which argument it was successful.

Against that background, SSL says therefore that taking a broad-brush approach, 75% of its costs incurred to date can and should be considered Part 8 costs.

I am unable to accept that analysis. I proceed on the basis that costs claimed as Part 8 costs must be costs incurred in the Part 8 proceedings. As I have already observed, SSL’s statement of costs provided prior to the Part 7 hearing were identified as £95,925.00.

I am unable to accept costs of £129,499.00 as proportionate or reasonably incurred in relation to the Part 8 proceedings.

Whilst I do not consider the decision to instruct a silk and a junior was unreasonable, I do not see how SSL can recover a “Fee for Part 7 hearing” in respect of leading and junior counsel as part of an assessment of Part 8 costs. This results in a reduction of £57,348. I accept the majority of SSL’s submissions went to the issue of the applicability of paragraph 9.4.5 of the TCC Guide and issues of construction. However, those were arguments in the Part 7 enforcement proceedings where SSL has accepted it must pay LOR’s costs.

Whilst the rates claimed by Macfarlanes are above the guidelines, the guidelines are just that; guidelines. That said, on the facts of this case, whilst SSL can retain Macfarlanes at the rates claimed I do not consider that LOR should bear the total of those costs on a standard assessment. Looking at the matter in the round I reduce the profit costs from the claimed £56,612.00 to £40,000 which I consider a reasonable and proportionate assessment.

That gives a total for assessed Part 8 costs of £55,539.00. It follows that the sum recoverable by SSL on an issues-based cost order is £27,769.50.

My decision is reflected in the draft order attached. It is attached in draft simply for confirmation that the calculations are correct (in particular because the schedule of interest calculations provided to me show two different figures on two separate sheets for the same calculation of adopting contract rate of base plus 3%) and that there are no other slips. On receipt of such confirmation, the order will be sealed.