Irwell Riverside Developments Limited v Arcadis Consulting (UK) Limited

Interest claimed as financing costs must be supported by a reasonable assessment of the period and rate for which the loss was incurred. A broad-brush midpoint calculation may be appropriate where it achieves overall justice and proportionality. Compound interest is not recoverable without evidence that the relevant borrowing, and the relevant compound rate, resulted from the loss in question.

For costs, the court identifies the successful party overall, applies the general rule in Civil Procedure Rules 1998, r 44.2, and then considers whether discrete issues or other circumstances justify adjustment. Interest on costs may run from payment of each invoice, subject to the costs apportionment.

The judgment followed an earlier merits judgment, in which IRDL recovered damages from Arcadis for losses arising from admitted negligence. The court determined consequential claims for interest, financing costs and lending fees, together with the costs of the action, a disclosure application and an interim payment on account of costs.

The principal issues were whether interest on remedial expenditure could be assessed by reference to midpoint dates; whether compound interest and increased borrowing costs were caused by the recoverable loss; which party was successful overall; and what costs and interest orders were just under Civil Procedure Rules 1998, r 44.2.

1. Interest on remedial costs. IRDL’s midpoint approach was right in principle. It provided a reasonable assessment of actual interest costs, avoiding disproportionate investigation of every invoice. The claim of £149,285.21 was allowed. Alternatively, the same sum was recoverable as a reasonable award of interest under the Senior Courts Act.
2. Compound interest. IRDL failed to prove that the structural remedial works caused any increase in Wellesley borrowing. Interest on the principal financing claim was therefore allowed at 8% simple interest, without compounding. The agreed figure was £1,103,536.14, together with £22,192.03 for the Sales Fees Claim.
3. Together facility and lending fees. The court rejected the claim based on the Together facility. The facility was taken out because of the wider financial disaster caused by the module problems, not because of the structural remedial works. The additional lending-fees claim also failed.
4. Costs of the action. IRDL was the successful party overall because it obtained a substantial judgment and Arcadis’s offers were insufficient. Under Civil Procedure Rules 1998, r 44.2, the court nevertheless reduced recovery to reflect IRDL’s failure on the critical-delay and module-damage issues. Arcadis was ordered to pay 60% of IRDL’s costs.
5. Disclosure application and interim payment. There was no order as to the costs of the disclosure application because it succeeded in part and failed in large part. The interim payment on account was £592,964.77, calculated at 90% of approved budgeted costs and 75% of incurred costs, each subject to the 60% costs order.
6. Interest on costs and payment. Applying Sharp and others v Blank and others [2020] EWHC 1870 (Ch), interest on costs was awarded at 8% simple interest from payment of each invoice, subject to the 60% apportionment. The parties had liberty to apply on calculation. Payment of the judgment debt was ordered by 28 August 2024, subject to any application to extend time.

The judgment records that the merits judgment was handed down on 19 July 2024 in the same proceedings: [2024] EWHC 1857 (TCC). It also records an earlier disclosure decision in the same proceedings, handed down on 15 November 2023: [2023] EWHC 2864 (TCC). This judgment determined consequential interest and costs issues.