Multiplex Construction Ltd v Cleveland Bridge Ltd & Anor

An appellate court may award interest when an interim payment on account of costs is repaid following the setting aside of the underlying costs order. The power arises expressly from the appellate power to order interest and the first-instance costs powers or, if necessary, by necessary implication.

When determining the successful party and the appropriate costs order on an appeal involving several issues, the court considers the appeal as a whole. Monetary value is relevant but not decisive. The movement from the lower court’s order, the relative significance of the issues, the time they occupied and each party’s degree of success may justify a proportionate costs award.

Following the Technology and Construction Court’s decision on preliminary issue 11, reported at [2007] EWHC 145 (TCC), Multiplex was ordered to pay 85% of Cleveland Bridge’s relevant costs and £150,000 on account. The Court of Appeal subsequently allowed Multiplex’s substantive appeal in part in [2007] EWCA Civ 1371.

The parties consequently agreed that the original costs order should be set aside, that the costs below should be reserved and that the £150,000 should be returned. The outstanding questions were whether interest could and should be awarded on that repayment, and what costs order should be made for the substantive appeal.

1. Appeal allowed. The agreed order setting aside the Technology and Construction Court’s costs order was approved. The costs of preliminary issue 11 below were reserved to Jackson J, and the interim payment of £150,000 was to be returned to Multiplex.

2. The court had power to award interest on the money to be repaid. Rule 52.10 of the Civil Procedure Rules 1998 gives the appellate court all the powers of the lower court, while rule 52.10(2)(d) expressly authorises orders for the payment of interest. The first-instance costs powers also permit interest on costs and payments on account. Those powers were found in rule 44.3(6)(g), read in the context of rule 44.3(8). If the power was not fully explicit, it arose by necessary implication.

   Rule 25.8(5), which permits interest where an interim payment exceeds the defendant’s ultimate liability, provided a relevant analogy. Its express wording did not exclude an equivalent power concerning a payment on account of costs.

3. Cleveland Bridge was ordered to pay interest on £150,000 at base rate plus 1%, running from the date of payment in March 2007 until repayment.

4. Multiplex was the successful party on the substantive appeal when the proceedings were viewed as a whole. Although Cleveland Bridge succeeded on the fabrication issue and retained its position concerning a larger monetary claim, Multiplex succeeded on the design issue and substantially improved its position relative to Jackson J’s order. The design issue also occupied substantially more of the hearing and the court’s consideration.

5. Allowing for Cleveland Bridge’s degree of success, Multiplex was awarded 50% of its costs of the substantive appeal. Lady Justice Smith agreed with Lord Justice May.

1. Court of Appeal (Civil Division): In [2008] EWCA Civ 133, allowed the costs appeal, ordered interest on the repayment of £150,000 and awarded Multiplex 50% of its costs of the substantive appeal.
2. Court of Appeal (Civil Division): In [2007] EWCA Civ 1371, allowed Multiplex’s substantive appeal on preliminary issue 11 in part.
3. Technology and Construction Court: Jackson J decided preliminary issue 11 in [2007] EWHC 145 (TCC). He later ordered Multiplex to pay 85% of Cleveland Bridge’s relevant costs and £150,000 on account. That costs order was set aside by agreement in this appeal.