Brookfield Construction (UK) Ltd v Mott Macdonald Ltd

In substantial construction litigation, case management must remain proportionate to the issues and likely value of the dispute. Delay claims should identify the events said to cause critical delay and explain their significance. A large claim does not, by itself, justify large expenditure. Costs must be assessed against the product achieved and may be regarded as unreasonable or disproportionate where extensive expenditure has produced inadequate pleadings or expert analysis. The court may treat costs estimates as maximum likely recoveries, subject to a reasonable and unforeseen increase. Parties are expected to co-operate, consider ADR promptly and understand that unreasonable resistance to ADR may affect later costs orders.

The claimant brought a claim exceeding £200 million against its engineering consultant in connection with delays and design issues arising from the Wembley Stadium project. Following review case management conferences, the court had to determine the scope of a proposed 2011 sub-trial and address complaints about the claimant’s incurred and estimated costs.

The court fixed the issues for the sub-trial, including breach, specified settlement claims, and causation and critical delay up to 2 August 2004. It also considered whether costs incurred on pleadings, experts, solicitor changes and document management were potentially unreasonable or disproportionate, and what control should be imposed on future recoverable costs.

1. Sub-trial scope. The court ordered a sub-trial covering all issues of breach, save variations, the Notional Tender Claim, specified settlement claims and causation, including delay and disruption, up to 2 August 2004. The parties’ agreement permitted the court to investigate causes of delay and determine critical delay as at that date, while recognising that later facts might bear on critical delay to project completion.
2. Proportionality of costs. The level of expenditure had to be considered against its product, rather than justified simply by the amount claimed. The claimant’s costs were potentially unreasonable and disproportionate because substantial expenditure had not produced sufficiently analytical pleadings or clear expert treatment of critical delay. The same concern applied to the sums spent on experts.
3. Recoverability of wasted costs. The claimant accepted that wasted or duplicated costs arising from its change of solicitors, and costs occasioned by the insolvency of its document-management firm, would not be recoverable. The court accepted those concessions.
4. Costs control. Following the approach illustrated by Barr and others v Biffa Waste Ltd (No 2) [2009] EWHC 2444 (TCC), the parties’ estimates were treated as their maximum likely recovery at the end of the sub-trial. A party could exceed its estimate only by identifying and explaining a reasonable unforeseen increase. This was a proportionate case-management measure consistent with the overriding objective.
5. Future conduct. The parties were urged to improve the clarity of the pleadings, co-operate in preparing the trial and explore ADR, particularly mediation. The parties’ willingness to participate in ADR would be relevant to later costs decisions.