DBE Energy Ltd v Biogas Products Ltd

An award of interest is discretionary and should fairly compensate a claimant for being deprived of money that ought to have been received. Interest on economic loss ordinarily runs from the date of loss, even where remedial expenditure has not yet been incurred. The same approach may apply to future replacement costs where the loss has already crystallised. It does not necessarily apply to future revenue loss which was pleaded as arising only when a facility reached full capacity. Costs may be reduced proportionately where unsuccessful claims caused discrete additional costs, but an issues-based order is not required where the central issues were common. The court may award costs incidental to proceedings, but recovery of pre-action or mediation costs depends on what is just in the particular circumstances.

Following the trial judgment in DBE Energy Ltd v Biogas Products Ltd [2020] EWHC 1232 (TCC), the court determined consequential matters. Damages of £224,303.77 had been awarded to DBE for losses connected with failed Pasteuriser Tanks, including incurred temporary replacement costs, future replacement and reinstallation costs, and future loss of revenue.

The parties disputed the dates from which interest should run, the appropriate costs order, whether costs of pre-action protocol compliance and mediation were recoverable, the costs of an application concerning redactions to a joint expert statement, and the amount payable on account of costs.

1. Interest. The jurisdiction under section 35 A of the Senior Courts Act 1981 was discretionary. Its purpose was to compensate fairly for deprivation of money that should have been received. Interest on incurred temporary replacement costs ran from the date each item of expenditure was incurred, applying the conventional approach in B.P. Exploration Co v Hunt (No. 2) [1979] 1 WLR 783 and West v Ian Finlay [2013] EWHC 868 (TCC).

2. Interest on future replacement and reinstallation costs, management fees and programmers’ costs ran from 29 January 2019, the date on which the cause of action accrued. The fact that the remedial expenditure had not yet been incurred did not mean that no loss had been suffered. The approach in Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] EWCA Civ 3 and Woodlands Oak Ltd v Conwell [2011] EWCA Civ 254 was applied.

3. No interest was awarded on the loss of revenue claim. That claim had been advanced as arising only when the facility reached full capacity, and there was no evidence that this had occurred. The claim therefore had not crystallised in January 2019.

4. Costs. Applying CPR r. 44.2 and the principles summarised in Triumph Controls – UK Ltd v Primus International Holding Company [2019] Costs LR 1571 and Amanda Jayne Welsh v Walsall Healthcare NHS Trust [2018] EWHC 2491 (QB), it was inappropriate to make an issues-based order. Liability was the central issue, and the issues and evidence concerning the unsuccessful claims substantially overlapped with the successful claim. A proportional order was appropriate because the Tank Heaters Claim and the exaggerated 15-week Delay Claim caused some additional costs. Biogas was ordered to pay 90% of DBE’s costs on the standard basis, subject to detailed assessment.

5. Under section 51 of the Senior Courts Act 1981, the court had jurisdiction over costs incidental to proceedings. Nevertheless, DBE had not satisfactorily complied with the construction pre-action protocol, and insufficient information was available to justify recovery of mediation costs. Each party was therefore to bear its own pre-action protocol and mediation costs. DBE was awarded £2,497.80 for its redaction application.

6. A reasonable payment on account, having regard to the 90% costs order, proportionality concerns and the absence of costs budgets, was £200,000.

First-instance consequential judgment following the trial judgment in DBE Energy Ltd v Biogas Products Ltd [2020] EWHC 1232 (TCC).