Recovery of a Claims Consulants Fees Engaged to Prepare a Claim for a Contractor

Recovery of a Claims Consulants fees engaged to prepare a claim for a Contractor

 

Contractors regularly include the costs of preparing a contractual claim within the claim itself, however, the Contractor is usually not entitled to reimbursement for the costs it has incurred in preparing the initial claim. The reason for there being no entitlement for the recovery of these cost is simply due to the fact that the Contractor is not required under the form of contract to prepare a claim in the sense of a fully detailed document such as might be used as the case in arbitration or court proceedings. When presenting his case to the Contract Administrator or Employer. Normally the Contractor is only required to issue relevant notices make a written application to the Contract Administrator and Employer, backed up by supporting information.

Thus the initial submissions by the Contractor to the Contract Administrator and Employer should not to amount to more than an application, setting out the relevant events; stating the applicable clauses under the contract under which he considers himself entitled to recover additional costs or receive an extension to the time for completion together with the relevant matters involved and linking the two together.

The Courts and generally Arbitrators would view this as being something that any Contractor which has suffered loss and/or expense should be able do without too much difficulty although it will involve proper research into the occurrences giving rise to the losses. As a result, fees paid to so-called claims specialists or to independent quantity surveyors or other professional advisers are not in principle allowable as a head of claim at the initial stage.

Where a claim proceeds to the arbitration or litigation stage, the Contractor is entitled to claim its costs which will include the cost of getting the claim into the right form for arbitration or litigation. The reasonable fees of a claims consultant for work carried out in preparing the Contractor’s case for arbitration together with the costs for expert witnesses and legal counsel may be included in the eventual claim and entitlement.

The expenditure of managerial time in remedying an actionable wrong done to a trading company can properly form the subject matter of a claim for ‘special damage’ in an action at common law. Therefore, it is possible that, in principle, there may be a claim for the cost of managerial time within the company spent on preparing a claim. Obviously, there could be no element of double recovery and such a claim should not be covered by any claim for head-office overheads.

The defence which is commonly presented against the Contractors recovery of the costs for the employment of a claims consultant is that such employment is unnecessary and, therefore, the costs do not amount to money necessarily expended. In such circumstances it is likely that a Contractor trying to recover such costs would be put to proof that the particular circumstances were such that made the employment of a claims consultant necessary.

Where a Contract Administrator or Employer demands the Contractor to submit claims in greater detail at an early stage to determine the Contractors entitlement the Contractor would be prudent to record in writing that he considers that the Contract Administrator or Employers requests exceed the requirements of the Contract and that costs associated with complying with their request will be incurred and shall be subsequently included within the Contractors Claims.

Where a Contractor does engage the services of a Claims Consultant at an early stage prior to arbitration or litigation then generally he should consider these costs to be non-recoverable under the contract. In the event that the dispute escalates to arbitration or litigation these costs may well be recoverable in the event that they are reasonable and they are presented in the correct manner.

 MALCONLAW 2012

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