黑洞社区

This is a story about claiming lawyers鈥� costs, when adjudication is followed by litigation on the same dispute. In short, all the effort in the adjudication was lifted by the same lawyers and repeated more or less when it came to litigation in the High Court. What鈥檚 more, the winner in the adjudication won again when the whole matter was tried afresh in the High Court.  So, if the rule, simply put, is that the winner can have its costs paid for by the loser, the issue is 鈥渨hat costs?鈥�

Let me tell you what the quarrel was about. The office supply giant Spicers Ltd has a whopper of a warehouse in Smethwick. They decided to contract with Savoye and Savoye Ltd for a whopper of a conveyor contraption for upwards of 拢2.5m supply and fix.  It was all done but then a row broke out worth 拢900,000. An adjudication notice pinged its way from Savoye to Spicers. Dear me, no, said Spicers鈥� lawyers, a conveyor system isn鈥檛 a construction contract, so off you toddle. Construction lawyer adjudicator, Mr Jonathan Hawkswell, said, dear me, no to Spicers鈥� objection and pressed on. His award required Spicers to stump up the 拢900,000. They refused. So Savoye sought to enforce. There was a trial on the same issue: is it a construction contract? Mr Justice Akenhead said yes. 

By now that quarrel, about the scope of the Construction Act and whether you can adjudicate and whether this was a construction contract, had run up legal bills for Savoye alone of 拢202,000.  Assume Spicers鈥� bill is about the same. So, 拢400,000 has been spent asking about the exclusion in the Construction Act. The exclusion from adjudicating applies to some engineering works but not others. The judge said the exclusions from the ambit of the Construction Act were historical: 鈥溾�� the arguments of various interest groups persuaded parliament that they should be excluded from its ambit. There is no particular logic in their exclusions other than that the industries in question were considered to be sufficiently important and (possibly) strategic to justify exclusion.鈥�

When the bill was going through parliament, a fair number of lawyers were horrified by this 28-day dispute decision-making idea. A fair number of lawyers still are horrified

To be fair, in 1996 when the bill was going through parliament, a fair number of lawyers were horrified by this 28-day dispute decision-making idea. A fair number of lawyers are still horrified: they want trials, the bigger the better.  Though I can鈥檛 figure why.

So, as to the winner鈥檚 costs, the judge said:

鈥淚t is also clear from reading the adjudication documentation, that the exact same point raised in the court proceedings was raised and argued before the adjudicator with extensive written witness evidence being provided by each party鈥� Essentially, the court proceedings involved a re-run of the same arguments and evidence, albeit I do accept that the later proceedings went into somewhat greater detail and in some respects had a different emphasis. Of course, each party in the adjudication had to pay its own costs. This context would lead to the inference that the costs of the court proceedings could have been relatively modest, taking into account that the legal team knew exactly what the issue was about and what evidence needed to be deployed in the court proceedings to counter the likely jurisdictional challenge.鈥�

On the face of things in litigation, Savoye was entitled to its lawyer鈥檚 fees of 拢202,000 from Spicers. But the court would not award more than 拢97,000. First the judge decided that one side spending 拢202,000 on a claim worth 拢900,000 was disproportionate. Then he dealt with the overlap between adjudication and litigation: 鈥淪avoye was dealing with an issue in the court proceedings, which it had addressed (at its own cost) in detail in the adjudication; it was deploying the same solicitors and principal factual witness as it had deployed in the adjudication. The issues raised in the court proceedings were not complex, as is at least partly evidenced by the fact that the overall hearings ran to less than two court days. Of course, some of the costs, such as those occasioned by Spicers鈥� application to adduce further evidence, were incurred as a result of something which was not in any way Savoye鈥檚fault.

鈥淚f no other information was available other than the headline costs figure, I would have been minded to identify a figure of about half of the costs some claim as proportionate.鈥�

Then he went on to consider the 鈥渓arge amount of partner鈥檚 time鈥�, which was 鈥渕uch more than simply supervise a very competent associate solicitor and liaise with the client鈥�.  So, the partner鈥檚 111 hours were reduced to 20. In fact, he said, the whole time charge of 364 hours was not reasonable. The barrister鈥檚 fees were even chopped by half.

And all this was brought about by a technicality about what a construction contract is. Isn鈥檛 it time to bring all and any commercial dispute into scope? Come on parliament, have a think.

Tony Bingham is a barrister and arbitrator at 3 Paper 黑洞社区s, Temple