Building works – Construction contract – Fixed costs – Defendant disputing damages claim – Arbitrator determining award – Claimant issuing proceedings to recover sum awarded – Defendant admitting claim on acknowledgment of service – Claimant seeking substantial costs – Whether defendant liable for fixed costs only – Application granted
The defendant had engaged the claimant contractor to demolish existing structures and build six residential units. A dispute arose as to the terms of the contract, which had been made in around September 2003 and incorporated, at least in part, the provisions of the 1998 JCT IFC Standard Form.
Various issues arose between the parties, resulting in the claimant seeking £241,172 plus VAT and interest. The defendant challenged. An adjudicator was appointed and determined that the claimant was entitled to a net sum of £63,912 plus VAT, interest of £7,589, and continuing interest until payment was made, together with his fees.
Correspondence ensued between the parties concerning the adjudicator’s jurisdiction in the matter and the sum awarded. The defendant subsequently wrote a “without prejudice save as to costs” letter on 24 October 2007, containing an “all-in settlement offer in full and final settlement of all outstanding claims” in the sum of £35,000.
On 1 November 2007, without further notice, the claimant issued a Part 7 claim form, calling upon the defendant to pay the sums that the adjudicator had ordered to be paid in the sum of £79,255 with costs on an indemnity basis. The Technology and Construction Court made an order abridging time for an acknowledgment of service to two days, which was faxed to the defendant on 6 November. The claim form was served the following day. By letter to the court dated 9 November, copied to the claimant, the defendant filed an acknowledgement of service, which admitted the full amount claimed as shown on the claim form.
An issue arose as to whether only fixed costs should be payable if the defendant to an issued claim admitted or paid the sum claimed within a few days of the issue on or before the acknowledgment of service. The defendant argued that the claimant’s costs occasioned by the claim should be limited to £100, which was the fixed amount payable under CPR 45 where liability in full was admitted. The claimant argued that the rules on fixed costs did not apply but, in any event, the court should exercise its discretion to order fuller costs.
Held: The application was granted.
In both r 45.1 and r 45.3 of CPR 45, which were entitled “Fixed Costs”, it was clear that the court retained a discretion to order such costs as were appropriate. The fixed costs regime applied in default if the court did not order otherwise. CPR 45 recognised that many court proceedings would be debt collection exercises that would not involve the use of independent solicitors but would be handled internally, and CPR 45 applied amounts and formulas to determine what the fixed costs were in any particular case.
The court recognised the importance of a summary and prompt procedure to secure the enforcement of adjudicators’ decisions that had been properly reached and, in this case, it was wholly appropriate for the court to exercise its discretion to order costs at a greater level than the costs fixed by CPR 45.
It appeared that the claimant had substantially followed the procedure set out in para 9.2 of the TCC Guide ((2nd ed) first revision, October 2007), which was now the norm for adjudication enforcement proceedings. Accordingly, it was inevitable that the costs would exceed the fixed costs called for in CPR 45 by a substantial amount.
It would be unfair to limit a successful claimant that had complied with the steps called for in the rules and the guide. The claimant had been justified in issuing proceedings following a threatened defence and an unqualified admission on the part of the defendant after issue.
Glovers Solicitors LLP appeared for the claimant; Mills & Co Solicitors, of Watford appeared for the defendant.
Eileen O’Grady, barrister
