Adjudication: recoverability of claims consultants’ costs

In Octoesse LLP v Trak Special Projects Limited [2016] EWCH 3180, the Technology and Construction Court (TCC) decided that the costs of claims consultants assisting in adjudication enforcement proceedings can be recovered as disbursements, assuming that those consultants acted in the adjudication.

Facts

Following a successful adjudication in favour of Trak Special Projects Limited (“Trak”), in which the adjudicator decided Octoesse LLP’s (“Octoesse”) Pay Less Notice was invalid, Octoesse commenced Part 8 proceedings seeking declarations that the adjudicator’s award was unenforceable.

At the conclusion of the hearing, Mrs Justice Jefford (“the Judge”) gave judgment in favour of Trak and ordered Octoesse to pay the sums awarded to Trak in the adjudication. Attention then turned to the question of costs.

Costs

Trak asked for its costs to be summarily assessed. Whilst counsel who appeared on behalf of Trak was instructed on a direct access basis, Trak had also engaged construction claim consultants, Wellesley Construction Services Limited (“Wellesley”), to assist with the proceedings. Hence, as well as counsel’s costs, Trak also sought to recover Wellesley’s costs in connection with: considering Octoesse’s claim and evidence, preparing the defence and a witness statement, instructing counsel, liaising with the court and attendance at court.

Although Octoesse took no issue with counsel’s costs, they submitted that Wellesley’s costs were not recoverable under CPR 46.5 (3), which provides that:

(3) The litigant in person shall be allowed –

(a) costs for the same categories of –

(i) work; and

(ii) disbursements,

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;

Agassi v Robinson (Inspector of Taxes) (No.2)

Relying on the Court of Appeal’s decision in Agassi v Robinson (Inspector of Taxes) (No.2) [2005] EWCA Civ 1507, Octoesse submitted that Wellesley’s costs were not recoverable as they were neither work done by the litigant in person nor disbursements which would have been allowed if made by a legal representative.

The Judge disagreed that Agassi was authority for a general proposition that costs of claims consultants or other consultants who give advice and support in litigation can never be recovered. Rather, the relevant question is whether the claim consultant’s costs can be recovered as a disbursement. The Judge held that such costs would be recoverable as a disbursement by solicitors if the work is such as would not normally be done by solicitors, but the Judge also recognised that there may nonetheless be specialist assistance, the cost of which would be recoverable.

Coming to this decision, the Judge noted that it was in this area of ‘specialist assistance’ where there was “a difficult dividing line between what is and is not recoverable”. However, the Judge was of the view that these two potentially conflicting approaches could be reconciled “if it is recognised that, in particular circumstances a solicitor might well normally not carry out work himself but rely on a specialist, even though the work in its broad description might be “solicitors’ work””. The Judge held that there is unlikely to be a ‘one size fits all’ in regards to disbursements; as what are regarded as normal solicitors’ disbursements may vary according to the nature of the case, reflecting both differing norms in different practice areas and changes in practice.

Distinct features of adjudication

The Judge observed that there were distinct features of adjudication which “can and should” be taken into account in considering what disbursements would be recoverable if made by solicitors and which would, in consequence, be recoverable by a litigant in person. The Judge gave two reasons for this:

1. In adjudication, parties are often represented by claims consultants or other consultants. If solicitors are instructed on the enforcement proceedings, particularly where they have not acted in the adjudication, it would, therefore be common practice, and indeed often necessary, to seek the assistance of the consultants who were involved in the adjudication;

2. Given the abridgement of time limits applied by the TCC in adjudication enforcement cases, it is normal and also necessary for solicitors to seek the assistance of the consultants involved in the adjudication. Because of the accelerated timetable, it would not be realistic to constrain what assistance might be required. Therefore, whilst solicitors would normally draft witness statements in connection with Court proceedings, in the circumstances of adjudication enforcement, it might also be normal for them not to do so and instead rely on those with specialist knowledge of not just the adjudication process generally, but of that particular adjudication.

NAP Anglia Ltd v Sun-Land Development Co. Ltd

The Judge also noted that there had been a number of cases where the costs of claims consultants had been recovered. In particular, NAP Anglia Ltd v Sun-Land Development Co. Ltd [2012] EWHC 51, where Edwards-Stuart J stated that the court should not adopt a “blanket approach” to the assessment of claims consultants’ costs but instead “they need to be looked at on an item by item basis”. He therefore rejected the submission that claims consultants’ costs were not recoverable in principle, but considered the relevant question to be whether those costs were reasonably incurred and reasonable in amount.

Judgment

In her judgment, the Judge concluded that the costs incurred by claims consultants assisting a litigant in person will usually be recoverable in adjudication enforcement proceedings, assuming that the same consultants have represented the party in the adjudication.

However, in this particular case, Wellesley’s costs of liaising with the court and preparing the schedule of costs were not recoverable because the Judge held this was solicitor’s work that would not require much of the assistance from the consultant. Furthermore, only half of the time spent instructing and liaising with counsel was recoverable on the basis that, if solicitors were instructed, they would not solely rely on consultants for this but would carry out some of these tasks themselves.

Conclusion

Octoesse LLP v Trak Special Projects Limited sets out the circumstances in which claims consultants’ costs may be recoverable and the types of costs that are likely to be recovered.  In cases where a claims consultant has assisted in the adjudication proceedings, the court recognises that their involvement in any subsequent enforcement hearing is likely to be beneficial, and often necessary.

However, it should not be assumed that parties can solely rely on a claims consultant and all the consultant’s costs will be able to be recovered. The judgment in Octoesse makes clear that work carried out by the claims consultant which could and would be carried out by a solicitor is unlikely to be recoverable. Therefore, care should be taken as to the work split on an enforcement action, between tasks allocated to a claim consultant and those to the Referring Party’s solicitors, to ensure maximum costs recovery on a successful enforcement action.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.