Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd (No. 3)

After a successful party wins a preliminary issue, the court may make an immediate costs order even though the litigation continues. The usual approach is to reserve costs where the unsuccessful party has made a payment into court or a Part 36 offer and damages remain unresolved. That is not an inflexible rule. An immediate order is appropriate in an exceptional case where the issue is distinct, the costs are identifiable, and the unsuccessful party’s claim has generated substantial costs without a contractual or legal basis.

A successful party will ordinarily receive a payment on account pending detailed assessment. The court must consider all the circumstances, including any appeal, the parties’ financial positions, the likely recoverable amount and proportionality.

This was an application by Cleveland Bridge UK Ltd for costs following its success on preliminary issue 11 in the continuing contractual dispute with Multiplex Constructions (UK) Ltd. The issue concerned whether Multiplex had a contractual basis for claims relating to roof temporary works in Scott Schedules 4B and 4D.

Multiplex relied on an open settlement offer and two Part 36 offers, arguing that costs should be reserved until the litigation was complete. Cleveland Bridge sought an immediate order for its costs and a payment on account. The court therefore had to decide whether the usual approach following offers should apply and, if costs were awarded, what proportion and interim payment were appropriate.

1. Costs of the preliminary issue. CPR r 44.3 makes the unsuccessful party’s payment of the successful party’s costs the general rule, while requiring the court to consider all the circumstances. Costs may be ordered by reference to a distinct issue or step in the proceedings.
2. Following a preliminary issue, the court may order costs immediately in favour of the successful party. Where the unsuccessful party has made a payment into court or a Part 36 offer, the normal order is to reserve costs until the remaining issues, including damages, have been resolved. That approach is not absolute. An immediate order remains available in an exceptional case.
3. This was such a case. Preliminary issue 11 was distinct, the relevant costs were identifiable, and Multiplex’s new roof temporary-works claim had no contractual basis unless Multiplex succeeded on the issue. The offers did not relate to the contractual damages claim and could not justify postponing the costs decision. Multiplex was ordered to pay 85 per cent of Cleveland Bridge’s costs of responding to Scott Schedules 4B and 4D and of preliminary issue 11. No separate order was made for the second defendant, which had played no perceptible part.
4. Payment on account. A successful party should generally receive a payment on account because detailed assessment delays payment of costs. The discretion remains subject to all the circumstances, including the possibility of an appeal, the parties’ financial positions, proportionality and the likely amount recoverable.
5. Cleveland Bridge’s weak financial position and Multiplex’s pending application for permission to appeal did not displace its immediate entitlement. Because information required concerning the conditional-fee uplift had not been disclosed, the uplift was excluded from the interim calculation. Multiplex was ordered to pay £150,000 on account within 14 days. Permission to appeal the costs order was refused because neither threshold test in CPR r 52.3(6) was satisfied.

This was a first-instance costs decision in ongoing proceedings. The judgment records that permission to appeal against the earlier decision on preliminary issue 8 was under consideration, and that Multiplex had unsuccessfully sought permission to appeal the decision on preliminary issue 11 at first instance. Permission to appeal the present costs order was refused under CPR r 52.3(6).