TONY BINGHAM Is an Arbitrator, Mediator and Barrister. As well as that, Tony is a renowned writer, commentator and lecturer.
Ready for the Chop
I Want My Legal Costs & Leave
Two parties got into a scrap over what constitutes a construction contract. When the winner asked for its hefty costs to be paid by the loser, that’s when the judge got his axe out.
This is a story about claiming lawyers’ 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’s 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 “what costs?” 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 £2.5m supply and fix. It was all done but then a row broke out worth £900,000. An adjudication notice pinged its way from Savoye to Spicers. Dear me, no, said Spicers’ lawyers, a conveyor system isn’t a construction contract, so off you toddle. Construction lawyer adjudicator, Mr Jonathan Hawkswell, said, dear me, no to Spicers’ objection and pressed on. His award required Spicers to stump up the £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 £202,000. Assume Spicers’ bill is about the same. So, £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: “… 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.”