Kington SARL & Ors v Thames Water Utilities Holdings Limited & Anor

The Court of Appeal dismissed the appeals against Leech J's order sanctioning the restructuring plan for Thames Water Utilities Holdings Limited, subject to a variation ordered by the Court in respect of release provisions. The court held that, on appeal, the ordinary costs rule under CPR 44.2 generally applies and that the plan company, as respondent, was overall the successful party. The court declined to apply a bespoke rule insulating objecting creditors from adverse costs on appeal, distinguishing the first‑instance practice in scheme and plan proceedings. Applying its discretion, the court allowed the plan company to recover 60% of its appeal costs from the two appellants (Kington and TWL), made them severally liable (each liable for 30% of the plan company's costs), and ordered payments on account equal to 35% of the allowed costs, resulting in each appellant paying £237,750 on account.

The Court of Appeal considered the appeals from Leech J's sanction of a restructuring plan for Thames Water Utilities Holdings Limited. The appellants were Kington S.À.R.L., Thames Water Limited (TWL) and Mr Charles Maynard MP; the respondents were the Plan Company and an ad hoc group of Class A creditors. The appeals challenged the sanction decision and raised legal issues about whether opposing creditors who would be out of the money in the relevant alternative should be taken into account, whether there was a restructuring surplus, and whether a different approach to costs should apply on appeal in scheme and plan proceedings.

The court framed the principal issues as: (i) whether the ordinary rule that costs follow the event under CPR 44.2 should apply on appeal from a sanction decision or whether a different approach (derived from first‑instance practice in scheme proceedings) should be applied; (ii) which parties were the successful parties overall; and (iii) whether and in what amount payments on account of costs should be ordered.

The court declined to extend the first‑instance practice that often protects objecting creditors from adverse costs orders to appeals. It held that once a judge has sanctioned a plan the position on appeal is different and, in the ordinary case, the successful party on appeal should be entitled to costs under CPR 44.2. Although the Court disagreed with the judge on some underlying legal principles, those disagreements did not affect the outcome because the appellants lost on the factual grounds on which they attacked the sanction. The Court therefore concluded that the Plan Company was overall the successful party but should not recover its full costs. It applied reductions to reflect (i) that no costs order was sought against one appellant, (ii) the Plan Company's partial loss on the release point, and (iii) the appellants' success on certain legal issues. The court fixed recovery at 60% of the Plan Company's appeal costs, with Kington and TWL severally liable for 50% each of that ordered sum, and ordered payment on account of 35% of the Plan Company's claimed costs, resulting in each appellant paying £237,750 on account.

The judgment also considered proportionality and reasonableness of large legal fees and flagged the risk of overlap where multiple counsel and teams are instructed in a short appeal of matters recently argued at first instance. The court noted relevant authorities on costs and proportionality and declined to interfere with Leech J's forthcoming decision on first‑instance costs.

The appeal was dismissed and the sanction of the restructuring plan was upheld (subject to the variation previously ordered by the Court in relation to releases). The Court concluded that the ordinary costs rule under CPR 44.2 applies on appeal from a sanction decision in the ordinary case; the Plan Company was the overall successful party but recovery of costs was reduced to reflect partial losses and the appellants' legal successes, with a payment on account ordered.

Appeal from the High Court (Chancery Division, Insolvency and Companies List), Leech J: [2025] EWHC 338 (Ch); appeal heard in the Court of Appeal (Civil Division) and dismissed: [2025] EWCA Civ 1003.