Parties often choose to be represented by claims consultants during the adjudication process. If the unsuccessful party in the adjudication does not pay up, it is often the case that a consultant’s involvement will continue beyond the adjudication proceedings.
The question of whether the costs of such involvement may be recovered in court proceedings was recently considered by Jefford J in Octoesse LLP v Trak Special Projects Ltd.
Octoesse LLP v Trak Special Projects Ltd
Octoesse engaged Trak as the main contractor for the construction of residential and retail units. The date for completion under the contract was 22 September 2014, extended to 29 September 2014 due to a delay in the commencement of the works.
Trak was delayed in completing the works. On 3 October 2014, the contract administrator issued a certificate of non-completion. Trak eventually achieved practical completion on 13 February 2015 and was granted a 9.5 week extension of time. No further certificate of non-completion was issued.
On 4 May 2016, a final certificate for payment was issued. Octoesse issued a pay less notice twelve days later, deducting liquidated damages in the sum of £89,250. Trak commenced adjudication proceedings claiming that sums were due to it on the basis that the pay less notice was invalid. In his decision dated 10 August 2016, the adjudicator agreed.
Part 8 proceedings
Octoesse commenced Part 8 proceedings seeking declarations:
- As to the proper construction of the relevant contract clauses (clauses 2.22 and 2.23 of the JCT’s IC 2011.
- That the pay less notice was valid and that it was entitled to deduct liquidated damages.
- That the adjudicator’s decision was unenforceable.
Trak counterclaimed for the sums due pursuant to the adjudicator’s decision.
At the hearing, Jefford J gave judgment in favour of Trak.
Attention then turned to the question of costs. While there was no doubt that Trak was, in principle, entitled to have its costs summarily assessed, Octoesse objected to the recovery of certain costs, namely the costs of a claims consultant Trak had engaged to provide assistance in the court proceedings.
Trak sought to recover the claims consultant’s costs in considering Octoesse’s claim and evidence, preparing the defence and a witness statement, instructing counsel, liaising with the court and attendance at court.
Octoesse submitted that such costs were not recoverable under CPR 46.5(3), which provides that:
“The litigant in person shall be allowed –
(a) costs for the same categories of –
(i) work; and
which would have been allowed if the work had been done or the disbursements had been made by a legal representative on the litigant in person’s behalf.”
Octoesse primarily relied upon the Court of Appeal decision in Agassi v Robinson (Inspector of Taxes) (No.2) as authority for the proposition that claims consultants’ costs are not recoverable because they are not work done by a litigant in person, nor are they disbursements that would have been allowed if made by a legal representative.
In Agassi, the Court of Appeal considered whether the costs of engaging a tax specialist were recoverable under CPR 48.6(3) (the predecessor to CPR 46.5(3)). The court held that, while the costs of the tax specialist providing general assistance to counsel were not recoverable, there was no reason in principle why costs in respect of ancillary assistance that the specialist provided could not be recovered. This was on the basis that the provision of such assistance in a specialist, esoteric area of the law was not the kind of work that would normally be done by a solicitor or, alternatively, because it was possible to characterise the specialist services as those of an expert.
On that basis, Jefford J found that Agassi is not authority for a general proposition that the costs of claims consultants or other consultants who give advice and support in litigation can never be recovered. Jefford J derived the following principles from that judgment:
“(i) Where a litigant-in-person seeks to recover the costs of a consultant’s assistance, the relevant question is whether, in the particular instance, the consultant’s costs are recoverable as a disbursement.
(ii) That question is answered by posing and answering the question whether those costs would have been recoverable as a disbursement if it had been made by a solicitor.
(iii) Costs would be recoverable as a disbursement by solicitors if the work is such as would not normally be done by solicitors.
(iv) But there nonetheless may be specialist assistance the cost of which would be recoverable.”
Jefford J noted that the area where the difficulty lies is the dividing line between what is and what is not “specialist assistance”. For example, in Agassi, Dyson LJ characterised briefing counsel as specialist assistance even though, on the face of it, this was work that a solicitor would normally carry out. Jefford J stated that:
“… what are normal solicitors’ disbursements may vary according to the nature of the case or the type of case and reflect both differing norms in different areas of practice and indeed changes in practice.”
Jefford J also referred to a number of authorities in which claims consultants costs were recovered where they provided services in connection with the enforcement of an adjudicator’s decision. One was NAP Anglia Ltd v Sun-Land Development Co Ltd, where Edwards-Stuart J held that the claims consultant’s costs were recoverable.
Jefford J’s judgment
Jefford J concluded that the costs incurred by claims consultants assisting a litigant in person will usually be recoverable in adjudication enforcement proceedings where the consultant has represented the party in the adjudication. This decision was reached for the following reasons:
- In adjudication, parties are often represented by claims consultants. It is common for jurisdictional grounds relating to the conduct of the adjudication to be raised to resist enforcement, and it is often necessary to seek the assistance of the consultants who are familiar with the factual background.
- The standard procedures for dealing with adjudication enforcement claims abridge time limits, meaning that it is unrealistic to constrain what assistance might be regarded as normal or necessary.
- The costs of liaising with the court and preparing the schedule of costs were not recoverable because this was very much solicitor’s work that would not require any assistance from the consultant.
- Only 50% of the time spent instructing and liaising with counsel was recoverable on the basis that, if solicitors were instructed, it was unlikely that they would wholly rely on the claims consultant for this (even if they may seek the consultant’s assistance).
This case helpfully sets out both the circumstances in which a claims consultant’s costs may be recovered, and the types of costs that will usually be recoverable. In circumstances where a claims consultant has been heavily involved in adjudication proceedings, their assistance in any subsequent enforcement proceedings will be desirable and often necessary, and the court’s approach to the recoverability of costs will reflect that fact.
It is notable that Jefford J considered these costs to be recoverable in Part 8 proceedings (rather than solely in Part 7 enforcement proceedings). This was on the basis that the Part 8 proceedings went to the substance of the dispute in the adjudication and it would therefore be artificial to make a distinction between the two.
However, the judgment makes it clear that not all claims consultants’ costs will be recoverable. If the work done by the claims consultant could and would usually have been carried out by a solicitor, such costs are unlikely to be recoverable. Therefore, parties should not assume that they can rely solely on a claims consultant and hope to recover all of their costs.
Further, there is currently no suggestion that, where parties have previously adjudicated and have been represented by claims consultants, the costs of engaging those consultants will be recoverable in court proceedings other than Part 7 enforcement proceedings (or closely related Part 8 proceedings). Indeed, in other cases, the necessity for the claims consultants’ involvement will arguably be diminished.