Laing O'Rourke Delivery Limited v Shepperton Studios Limited

Summary

Following the enforcement of an adjudicator's decision, the parties could not agree interest and costs. The dispute ran across two sets of proceedings: a Part 7 claim to enforce the decision and a Part 8 claim in which the paying party sought declarations that nothing was due. The court resolved interest and allocated the costs of both.

On interest, the question was whether to keep the adjudicator's approach or apply the contract. On costs, the enforcing party had clearly won the Part 7 enforcement, but the Part 8 claim turned on two issues of construction on which each side succeeded on one.

Mr Simon Lofthouse KC applied the contractual basis for interest and awarded the enforcing party its Part 7 costs. On the Part 8 claim he held that neither party was the winner and made an issues-based order under which each recovered half of its Part 8 costs, both sets being summarily assessed.

Background and facts

The claimant had obtained an adjudicator's decision in its favour and brought Part 7 proceedings to enforce it. The defendant brought Part 8 proceedings seeking declarations that nothing was due, based on two issues of construction going to whether a periodic payment fell due. The enforcement hearing in effect disposed of both claims.

After judgment, the parties disagreed on the rate and basis of interest and on who should bear the costs of each set of proceedings. Both sides had prepared statements of costs, and the enforcing party had also incurred further costs on a contested stay, on which it succeeded.

The issue

The court had to decide whether to follow the adjudicator's approach to interest or apply the contractual provisions, and how to allocate the costs of the Part 7 enforcement and the Part 8 construction claim, in particular whether either party could be treated as the overall winner of the Part 8 proceedings.

The decision

On interest, the judge held it open to the court to depart from the adjudicator's approach, since both parties invited a departure in at least one respect and the Part 8 proceedings allowed the court to fix the true sum due. He applied the contract, under which VAT forms part of the price on which interest runs:

"the correct approach to interest is to reflect the contractual provisions, which are that VAT forms part of the contact price against which interest is to be applied."Mr Simon Lofthouse KC, paragraph 5

That approach, consistent with Pharos Offshore v Kenvor Morlift [2025] EWHC 2496, produced a total of £3,838,392.77 including interest, and the parties then agreed interest on that basis. On costs, the enforcing party was entitled to its Part 7 costs, which the paying party accepted. The judge stressed that the two sets of proceedings had to be treated separately:

"It is important to keep the Part 7 and Part 8 proceedings separate and distinct for cost purposes."Mr Simon Lofthouse KC, paragraph 13

On the Part 8 claim, each party had succeeded on one of the two central construction issues and failed on the other. Neither could be treated as the winner, and, the issues being of similar substance, the just order was that each recover half of its Part 8 costs. Both sets of costs were summarily assessed, with reductions where post-hearing or counsel costs were unreasonable in amount, and where costs of the Part 7 enforcement had been presented as Part 8 costs.

Practical implications

The court can depart from an adjudicator's interest approach on enforcement. Where Part 8 proceedings allow the true sum to be determined, and both parties invite a departure, the court can substitute the contractual basis for interest, including whether VAT forms part of the sum on which interest runs.

Keep Part 7 and Part 8 costs separate. Winning the enforcement of an adjudicator's decision does not make a party the winner of a parallel Part 8 construction claim. The costs of each set are assessed on their own footing, and the outcome of one does not carry the costs of the other.

An even split on the issues can mean an even split on costs. Where a Part 8 claim turns on two issues of similar weight and each side wins one, the court may treat neither as the winner and order each to recover half of its costs, rather than awarding costs to the party left better off in money.

Costs of enforcement cannot be dressed up as Part 8 costs, and offers protect the position. A party must claim only the costs genuinely incurred in the relevant set of proceedings. Where a split result was foreseeable, a party that makes no offer to protect its position on costs cannot complain of an issues-based order.

Laing O'Rourke Delivery Limited v Shepperton Studios Limited [2026] EWHC 771 (TCC), Technology and Construction Court, Mr Simon Lofthouse KC sitting as a Deputy Judge of the High Court. Judgment handed down 25 March 2026.