ISG Retail Limited v FK Construction Limited (Consequential matters)

The power under CPR 8.1(4) is a case-management power exercised in accordance with the overriding objective. The court should consider all relevant circumstances, particularly whether transferring proceedings to Part 7 is likely to save costs and promote an earlier resolution. Dismissal and commencement of fresh proceedings is not required merely because substantial re-pleading will be necessary. Where the existing pleading provides a reasonable foundation for Part 7 proceedings, transfer may be preferable if it avoids delay, duplication and increased costs.

Summary assessment must produce a proportionate and reasonably incurred figure. It is not an item-by-item detailed assessment or full indemnity. Specialist expertise and case complexity may justify substantial fees, but excessive staffing, documentary work and counsel’s fees may be reduced.

ISG Retail Limited brought Part 8 proceedings against FK Construction Limited concerning prolongation costs valued at approximately £4.69 million. In an earlier judgment, the court declined to make declarations. The court then determined two consequential matters on written submissions: whether the proceedings should continue under Part 7 and the appropriate costs order.

FK argued that ISG’s pleading would require substantial revision and that the Part 8 proceedings should be dismissed. ISG sought permission to serve revised Particulars of Claim within the existing proceedings. FK also sought its costs, which the parties agreed could be summarily assessed.

1. The Part 8 proceedings were ordered to continue under Part 7 pursuant to CPR 8.1(4). The power is essentially a case-management power and must be exercised in accordance with the overriding objective, as explained in Berkeley Homes (South East London) v John Sisk and Son Ltd [2023] EWHC 2152 (TCC).

2. All relevant circumstances must be considered. Particularly relevant factors were whether transfer would save or increase costs and whether it would promote or delay resolution. Sleaford Building Services v Isoplus Piping Systems Ltd [2023] EWHC 969 (TCC) was materially different because very little of the pleading would have remained. TClarke Contracting Limited v Bell Build Limited [2024] EWHC 992 illustrated that transfer can be appropriate where use of Part 8 is laden with risk.

3. Although ISG’s statement of case required substantial revision and expansion, it provided a reasonable foundation for Part 7 proceedings. Dismissal would probably cause delay and increased costs by returning the litigation to the beginning, whereas transfer allowed the court to remain seised and give directions for an expeditious resolution. Revised pleadings and an early case management conference were directed.

4. FK was awarded its costs of the Part 8 proceedings following summary assessment under CPR 44.3(5) and 44.4(1)(a). RG Securities (No 2) Limited v Allianz Global Corporate and Speciality CE [2020] EWHC 2047 (TCC) confirmed that summary assessment is not a detailed assessment or full indemnity and that costs must be proportionate and reasonably incurred. FK’s overall costs were disproportionate, particularly its documentary expenditure, team size and counsel’s fees. Costs were assessed at £133,000.

First-instance consequential judgment. The court referred to its earlier judgment in the same proceedings, ISG Retail Limited v FK Construction Limited [2024] EWHC 878 (TCC), in which declarations were declined.