Introduction
I recently had the pleasure of attending the launch of Lam on Construction Claims in Malaysia. One subject covered at the launch that will interest both claimants and claims consultants is the recoverability of the cost of preparing claims, particularly when third-party consultants undertake this task.
Lam submits that claim preparation costs should not be recoverable if they are incurred purely to comply with the express requirements of the contract.[1] However, he also refers to cases where these costs might be recoverable.
Firstly, in Croudace,[2] an architect committed a breach of contract by failing to assess a contractor’s loss and expense claims. The employer was liable for damages associated with that breach, and the damages included the cost of preparing the contractor’s claim.[3]
Secondly, in Nap Anglia,[4] claims preparation costs were recoverable where a claims consultant assisted a solicitor. However, the court might assess the costs, which should be reasonably incurred and reasonable in amount.[5]
Finally, Lam notes that arbitral tribunals can have the discretion to determine the costs of arbitration,[6] which could include claims consultancy or expert witness fees.
My general view is that, subject to the express terms of the contract in question, such costs should be recoverable to the extent that they are caused by events or circumstances that give rise to the principal entitlement to an extension of time (EOT) or additional payment.
For example, under the FIDIC Yellow Book 2017, the contractor is entitled to an EOT to the extent that completion is delayed by various events, including certain climatic conditions, unforeseeable personnel or goods shortages, and any delay, impediment or prevention caused by or attributable to the employer.[7] Also, a fully detailed claim for an EOT or costs (or both) must be submitted, describing “the event or circumstance giving rise to the Claim”.[8]
I would argue that where the circumstances include entitlement to an EOT or costs and where the consulting cost would not have been incurred in the absence of such circumstances, then those circumstances directly gave rise to the cost and, therefore, to the claim to recover them.
Adrian Dobbie-Holman is a Regional Director for CCi based in Kuala Lumpur. Please feel free to contact him with any construction claims or dispute-related enquiries that you might have.
[1] Paragraph 5-117.
[2] Croudace Ltd v London Borough of Lambeth.
[3] Paragraph 5-114.
[4] Nap Anglia v Sun-Land Development Co. Ltd.
[5] Paragraph 5-115.
[6] Paragraph 5-116.
[7] Clause 8.5 [Extension of Time for Completion].
[8] Clause 20.2.4 [Fully detailed Claim].
