Judgment date: 3 October 2013
Following a hearing at which the claimant successfully obtained judgment to enforce an adjudicator’s decision, the Court was asked to summarily assess the claimant’s costs and, more specifically, to determine whether these should be awarded on an indemnity or standard basis in favour of the claimant. The Court held that the award of indemnity costs was not sufficiently justified by the facts of the case characterised by (i) an unsuccessful challenge but one which was not without some merit, (ii) the defendant’s failure to raise points at the oral hearing and its provision of written submissions after the oral hearing instead, and (iii) offers being made by the claimant before proceedings were issued and before the hearing. The Court also adjusted the hours claimed and found that £18,000 instead of approximately £26,000 represented a fair and reasonable assessment of costs overall and was proportionate to the complexity of the enforcement proceedings and the amount which was in dispute (at just over £200,000).
Technology and Construction Court, Mr Justice Akenhead
Background
The main proceedings related to the enforcement of an adjudicator's decision which was challenged by the defendant on the basis that there had been an excess of jurisdiction and a breach of the rules of natural justice on the part of the adjudicator. Judgment was given in favour of the claimant and the only outstanding issue related to costs.
Issues
The Court was asked to decide at what level the claimant’s costs should be assessed and, specifically, whether the claimant should be awarded indemnity costs against the defendant on the grounds that:
- the defendant acted unreasonably both in raising and maintaining defences on jurisdictional and natural justice grounds;
- the defendant failed without good reason to raise points during the oral hearing and provided written submissions after the oral hearing instead; and
- the claimant made an offer to settle before the proceedings were issued and shortly before the hearing, both of which were not accepted by the defendant.
Decision
The Court rejected the claimant’s request for an award of indemnity costs and granted costs on the standard basis due to the following reasons:
- The defendant did not act unreasonably as even though the challenge on jurisdictional grounds was weak, the challenge on the ground of an alleged failure to comply with the rules of natural justice was not without some merit.
- While it was most unfortunate that the relevant points had not been raised at the oral hearing, failure to do so and the subsequent provision of further written submissions after the oral hearing do not merit the imposition of indemnity costs.
- It was difficult for the Court to attach any weight to the offers because the offers related to the final accounting between the parties on the particular project (allowing for claims and counterclaims) and not to the enforcement proceedings as such. Thus, the Court did not have any knowledge or evidence as to whether the offers were realistic or not.
The Court also found that legal fees of approximately £26,000 for a not particularly complex adjudication enforcement, where just over £200,000 was involved, were excessive and awarded a total of £18,000 instead. The Court found that:
- The appropriate number of hours to spend on reviewing the adjudication submissions, drafting the pleadings and on legal research was 13 hours and not 22.9, as claimed by the claimant.
- The deployment of leading counsel was unnecessary and that junior counsel should have been deployed.
- £3,800 was too large a sum for the post-hearing costs and £2,500 would be appropriate.
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