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Cost assessment up to 4 December 2023
Cost assessment up to 4 December 2023
During this period, I have concluded that J&BH is liable to pay A & V’s costs in this period.
At no time has A & V been represented in these proceedings. Accordingly CPR Part 46.5 applies:
This rule applies where the court orders (whether by summary assessment or detailed assessment) that the costs of a litigant in person are to be paid by any other person.
The costs allowed under this rule will not exceed, except in the case of a disbursement, two-thirds of the amount which would have been allowed if the litigant in person had been represented by a legal representative.
The litigant in person shall be allowed –
costs for the same categories of –
work; and
disbursements,
which would have been allowed if the work had been done or the disbursements had been made by a legal representative on the litigant in person’s behalf;
the payments reasonably made by the litigant in person for legal services relating to the conduct of the proceedings; and
the costs of obtaining expert assistance in assessing the costs claim.
The amount of costs to be allowed to the litigant in person for any item of work claimed will be –
where the litigant can prove financial loss, the amount that the litigant can prove to have been lost for time reasonably spent on doing the work; or
where the litigant cannot prove financial loss, an amount for the time reasonably spent on doing the work at the rate set out in Practice Direction 46.
A litigant who is allowed costs for attending at court to conduct the case is not entitled to a witness allowance in respect of such attendance in addition to those costs.
For the purposes of this rule, a litigant in person includes –
a company or other corporation which is acting without a legal representative ….
CPR Part 46(4)(b) refers to “the rate set out in Practice Direction 46”. This is presently, and was at all material times, £19 per hour.
A & V submitted in its first round of costs submissions:
A&V Building Solution Limited (A&V) represented by myself, Mr Alex Paduraru as a Litigant in Person (LIP), respectfully submits these submissions as to costs in these proceedings. There submissions are made pursuant to CPR 44.2 and CPR 46.5, and in accordance with the Court’s direction in paragraph 48 of the draft judgment.
Mr Paduraru, acting as a litigant in person, has undertaken an extensive and burdensome level of legal and administrative work that would otherwise have been carried out by legal professionals. This work, by its nature, has involved the same level of complexity and diligence that solicitors and counsel typically perform. Despite the demanding nature of these proceedings, I, Mr. Paduraru, was compelled to act as a litigant in person due to JBH’s refusal to honour Mr Blizzard’s adjudication decision and pay the sum due to A&V, which caused substantial financial strain.
JBH’s non-compliance with its obligations including the wrongful issue of Part 8 proceedings in bad faith, left A&V in a dire financial position, depriving the company of the resources to retain legal counsel. JBH’s failure to pay the £150,000 awarded by Mr Blizzard in January 2022 effectively denied A&V its right to secure legal representation, thus forcing me to act as a litigant in person throughout these protracted proceedings.
I have had to take numerous days off work, resulting in lost income, in order to manage and deal with this case.
The work undertaken by me, Mr Paduraru, includes, but is not limited to:
The preparation of all legal documents, bundles, and submissions;
Extensive correspondence with the Court and the Defendant’s legal representatives;
The review and analysis of complex evidence and documentation;
Attendance at all hearings (both in person and remotely), including the five-day trial;
Managing the administrative aspects of the case and responding to JBH’s legal strategies, which have been deliberately obstructive and in bad faith.
JBH’s conduct throughout this litigation has been nothing short of oppressive. JBH has repeatedly refused to engage in good faith settlement discussions, rejected the reasonable efforts of A&V to resolve the dispute outside of court, and needlessly prolonged these proceedings, causing A&V to suffer financially and operationally. This has forced A&V to expend significant time, money, energy, and resources in an effort to secure the payment that JBH was obligated to provide from the outset.
Had A&V [had] the opportunity [of having] been represented by solicitors and counsel in these proceedings, the costs incurred by A&V would have been no less than those of JBH, which currently stand at £166,359.02 as per JBH’s approved costs budget following the CCMC hearing ….
These figures, approved by the Court, provide a reasonable estimate of the legal fees that A&V would have incurred had it not been forced to act as a litigant in person.
Therefore, applying the two-thirds rule under CPR 46.5(2)(a)(i), A&V claims only £110,906.01 (and/or two-thirds of JBH final costs as they may have increased since) as recoverable Litigant in Person (LIP) costs. This figure reflects the substantial time spent and legal work undertaken by me, Mr Paduraru, and is justified by the fact that my work mirrored the scope, time and complexity of work performed by JBH’s legal team in this case HT-2023-000006.
[REIMBURSEMENT] OF COURT FEE
A&V incurred a court fee of £10,000 in January 2023 to initiate these proceedings. This fee was an essential disbursement, necessitated by JBH’s failure to comply with the Pre-Action Protocol for Construction and Engineering Disputes. JBH’s refusal to pay the amounts due under the adjudicator’s Mr. Blizzard decision left A&V with no option but to pursue legal action in this Court. The fee of £10,000 represents a direct financial loss to A&V, which should be fully reimbursed .
….
CONSULTANT/QUANTITY SURVEYOR COSTS
In addition to the Litigant in Person costs, A&V also incurred expenses for the valuable services of Mr. Judd, a construction consultant and quantity surveyor. Mr Judd’s expertise was crucial to the technical aspects of this case, particularly in relation to the measured works and the variation account. The complexity of these matters required an expert understanding of the construction industry, contractual variations, and project valuation.
Mr. Judd’s role extended beyond technical evaluation. He provided indispensable support in preparing evidence, advising on construction practices, and assisting with the analysis of the Defendant’s submissions. His input was fundamental to presenting A&V’s case more clearly and comprehensively.
Furthermore, Mr. Judd played a significant role in attempting to resolve the dispute without the need for adjudication or court proceedings and the Court is aware of this fact. Mr. Judd engaged in extensive correspondence with JBH in an effort to reach an amicable resolution. Regrettably, JBH consistently rejected these overtures, demonstrating a clear intention to resist payment through procedural delays and obstructions. Mr. Judd’s efforts to avoid unnecessary litigation underscore the unreasonable stance adopted by JBH, forcing A&V into further litigation despite the possibility of earlier settlement back in 2021.
A&V claims only £10,569.12 for Mr. Judd’s services, which were necessary for proper conduct of this case …
J&BH responded to this at length in its Responsive Submissions on Costs.
Firstly, J&BH submitted:
As to the amount of costs, the Claimant claims two-thirds of the total costs set out in the Defendant’s costs budget.
The Claimant’s position is incorrect. The Claimant is not entitled to, and the Court should not order, a theoretical figure by reference to the Defendant’s costs.
CPR 46.5(2) is an overall limit or cap (see commentary to the White Book at 46.5.1), that a litigant in person’s costs should not exceed, save for disbursements, two-thirds of the amount which would have been allowed if it had been represented. That does not mean the Court can or should award a litigant in person two-thirds of a represented party’s costs.
I accept J&BH’s submission in this regard: I agree that CPR Part 46.5(2) is an overall limit or cap.
Then J&BH submitted:
the Claimant has failed to provide any, or any credible, evidence to allow the Court to make an award of costs on this basis.
As to CPR 46.5(4)(a):
No financial loss has been proved. Paragraph 3.2 of PD 46 has not been complied with:
“Where a self represented litigant wishes to prove that the litigant has suffered financial loss, the litigant should produce to the court any written evidence relied on to support that claim, and serve a copy of that evidence on any party against whom the litigant seeks costs at least 24 hours before the hearing at which the question may be decided.”
Significantly, the loss is of the litigant, i.e. A&V, not Mr. Paduraru, A&V’s financial loss was sought as a claim in these proceedings. The Court has already found that A&V had not established any financial loss at paragraphs 504 and 505 of Judgment No. 5. Costs cannot, therefore, be awarded under CPR 46.5(4)(a).
Even if Mr Paduraru’s lost income could be relevant, the evidence he gave at trial as to when he was and was not working was incomplete, inconsistent and unreliable. There is no clear evidence that he had to take days off work he otherwise would have been paid for, in order to attend to this claim.
As to CPR 46.5(4)(b):
The Claimant has failed to provide a proper breakdown of the work done or the time spent (including, for example, for each cost budgeting phase). A basic level of information should be required before the Court considers making a cost order. An award of costs is intended to be compensatory, not a penalty to a paying or a windfall for a receiving party.
In the period up [to] 4 December 2023 (the period where the defendant accepted there should be a cost order in the Claimant’s favour if sufficient information had been provided), time was also spent on the following matters, none of which form part of are recoverable as costs of these proceedings:
The Blizzard and Smith Adjudications.
The Part 8 proceedings and appeal.
The enforcement proceedings.
As a maximum, the period up to 4 December 2023, covers the pre-action and statements of case phases (which in fact extended to January 2024). The Defendant incurred total costs of £44,282.12 in those phases, which included the cost of the applications, (see the costs budget …). At an average hourly rate of £275, this equates to c. 160 hours (£44,282.12 ÷ 275 = 161.03). The time spent by Mr. Paduraru would be less because the Defendant’s hours, for example at hearings, would include time for both solicitors and counsel. Per paragraph 3.4 of PD46, the amount which is to be allowed to a litigant in person under CPR 46.5(4)(b) is £19 per hour. £19 at 160 hours would be £3,040. That is the maximum figure which the Court should consider for the Claimant’s costs up to 4 December 2023.
Standing back 160 hours is more than sufficient given the Claimant’s main tasks in this period were:
A letter of claim which replicated the submissions in the Adjudication and was drafted by Mr Judd in any event (see below).
A very brief claim form.
The application hearings, where the Claimant’s time and focus was mainly on its own finances which was a limited and relatively simple issue for the Claimant to address in terms of time required.
The Claimant’s multiple attempts to amend its case, on which (i) the Court has already made a partial costs order, (ii) significant claims made by the Claimant were struck out, and (iii) otherwise the Claimant’s evidence and position did not significantly develop from the adjudications.
The Defendant’s time and costs were increased as a result of facing a litigant in person, including the extra administrative burden of correspondence and bundles, and the additional burden the Defendant carried in fully addressing the law. The Claimant spent minimal time researching or addressing the law. The Defendant does not criticise the Claimant in that regard, but it means the time spent by the theoretical represented party would have been less than the time spent by the Defendant.
The Claimant cannot recover for all the time spent by Mr Paduraru. Time spent acting as client or witness is not recoverable. The Claimant is only allowed, per CPR 46.5(3), to recover for categories of work which would have been done by a legal representative (“costs for the same of – (i) work; and (ii) disbursements, which would have been allowed if the work had been done or the disbursements had been made by a legal representative on the litigant in person’s behalf”).
In summary, the Court should order that the Defendant is to pay 30% of the Claimant’s costs up to 4 December 2023 in the maximum amount of £1,000 (c.30% of £3,000) plus disbursements ….
The passages from both Parties’ submissions which I have quoted deal with arguments as to the allocation of costs under CPR Part 44.2: I have dealt with that issue above. Here I am concerned with the assessment of those costs.
The first issue with which I must deal is A & V’s submission in its third round submissions, namely that costs should be assessed on the indemnity basis. I do not accept that grounds for assessment on the indemnity rather than the standard basis have been made out. However, on the material before me the distinction in respect of A & V’s costs is of no materiality.
I accept J&BH’s submission that there is no evidence upon which I could base the assessment of Mr Paduraru’s own time spent upon the basis of CPR 46.5(4)(a), namely as a case where “the litigant can prove financial loss”. Thus I am required to assess the costs upon the basis of CPR Part 46.5(b) at an hourly rate of £19.
I have no evidence from A & V as to the actual number of hours spent by Mr. Paduraru. J&BH does not suggest that I should refuse to make any award of costs on that basis: instead, as seen above, it submits that I should take as a starting point the number of hours spent by J&BH’s solicitors during this period.
I think that this is a realistic starting point.
J&BH then submits that A & V cannot claim for time spent by Mr Paduraru as “client or witness”. I accept the general principle in theory, but think it impractical to apply in practice in respect of the time period I am presently considering.
Having accepted the 160 hours spent by J&BH’s solicitors as a realistic starting point, should that figure be adjusted, and, if so, upwards or downwards?
In my judgment it should be adjusted, and adjusted upwards. It seems to me that Mr. Paduraru as a litigant in person would have needed time to familiarise himself with matters which would be or should be second nature to experienced litigation solicitors. However, in the absence of any records of time taken, such uplift must be modest: I allow 200 hours.
Thus I assess the amount payable in respect of Mr Paduraru’s time in this period in the sum of £3,800.
I turn now to the sum which should be allowed for the Court Issue Fee. The amount paid by A & V was £10,000.
The fee payable for a Court Issue Fee is 5% of the amount claimed for a claim more than £10,000 and not more than £200,000, and £10,000 for a claim more than £200,000.
J&BH submits as follows in its Responsive Claim Submissions:
23. For the reasons set out in the Defendant’s submissions on costs, the Defendant considers that it should be ordered to pay 30% of the Claimant’s costs up to 4 December 2023, which includes the court issue fee. The Defendant should therefore be ordered to pay the Claimant for the court fee.
24. If the sums due under the Judgment and the Defendant’s set offs (which the Claimant should have accepted) are calculated with interest up to 9 January 2023 – the date the claim was issued – the total due to A & V is £100,978.46 … The issue fee for a claim for £100,000 would have been only £5,000. On any view, the Defendant should not be liable for the higher court fee which the Claimant only incurred because it, wrongly, valued its claim at over £200,000.
As to the point raised in paragraph 23 of those submissions, I have ruled against any reduction in the percentage of costs recoverable by A & V in this period.
As to the point raised in paragraph 24, the logic is powerful, but in my judgment A & V is entitled to the full £10,000.
The problem facing a Claimant is a claim such as the present is to assess the appropriate figure between £10,000 and £199,999.99 upon which to assess the Court issue fee. Underestimate that figure, and the Claimant is liable to be criticised.
In most cases, the interest claim is for interest under the Senior Courts Act 1981, but here the claim was also under the Late Payment of Commercial Debts (Interest) Act 1998, which is a claim for a specific remedy with its own code.
I do not need to determine the issue definitively, but it seems to me at least highly arguable that a claimant seeking interest under the 1998 Act should allow for that claim in calculating the amount claimed by way of Court issue fee. That is, of course, difficult to do at the date of issue of the Claim Form as it is not then known how long the case will take to come to trial. (In this case, it may be noted, J&BH resisted the relatively early trial date fixed by the Court: had its submissions succeeded, the amount payable under the 1998 Act would have been significantly higher).
Thus, it seems to me, a claimant would not be acting unreasonably if it erred on the side of caution in determining upon what claim sum to calculate the Court issue fee.
In the event the judgments I have handed down have entitled A & V to a little over £160,000, for which the Court issue fee would be £8,050.
In my judgment it would have been reasonable for the A & V to assess the Court issue fee as amounting to £10,000 even if it had not put forward the claims which did not succeed which took the claim well over £200,000.
Accordingly I award A & V the sum of £10,000 which it seeks.
The final item for assessment in this period is the amount payable in respect of Mr Judd’s fees.
The amount claimed is £10,569.12.
The first point raised by J&BH in paragraphs 26 and 27 of its Responsive Submissions as on Costs is as follows:
Firstly, on analysis of the invoices provided by the Claimant, the costs claimed do not relate to these proceedings. Mr Judd confirmed in his evidence at trial that he was now acting free of charge. The entries on the invoices provided all relate to the appeal, the adjudications or the enforcement proceedings. The only line item which does not do so is the final invoice (MS-1076) where £2,177.50 is claimed for:
“Pre Action protocol claim letter/Final Account spreadsheet 28/11/22 including review and incorporating adjudication evidence and commentaries.”
That is the only figure which could be considered costs of and occasioned by these proceedings.
Not without regret, since Mr Judd has been of considerable assistance to the Court, I accept this submission. Accordingly the maximum recoverable in respect of Mr Judd’s fees is £2,177.50.
J&BH take a second point:
The Defendant accepts that a more nuanced, and to some extent distinct, approach has been adopted in adjudication enforcement proceedings. Octoesse v Trak Special [2016] 6 Costs LR 1187 was a claim for a claim consultant’s costs in adjudication enforcement proceedings. Jefford J. set out the relevant principles as follows at [29]:
“In my judgment, Agassi is not, therefore, authority for a general proposition that costs of claims consultants or other consultants who give advice and support in litigation can never be recovered. The principles I derive from that decision are these:
i) Where a litigant-in-person seeks to recover the costs of a consultant’s assistance, the relevant question is whether, in the particular instance, the consultant’s costs are recoverable as a disbursement.
ii) That question is answered by posing and answering the question whether those costs would have been recoverable as a disbursement if it had been made by a solicitor.
iii) Costs would be recoverable as a disbursement by solicitors if the work is such as would not normally be done by solicitors.
iv) But there nonetheless may be specialist assistance the cost of which would be recoverable.”
Applied to this case, drafting a letter of claim is work which is normally done by solicitors. A solicitor would not therefore normally be able to recover the disbursement incurred paying Mr Judd to draft the letter of claim.
The factors outlined by Jefford J at [30] to [34] as to why “specialist assistance” may be required in adjudication enforcement proceedings (or a Part 8 claim following an adjudication) – i.e. the abbreviated timescales and that the issues often arise from the adjudication – do not apply in this case. This was a full Part 7 proceedings.
Alternatively, if the Court considers an element of specialist assistance would have been recoverable, it is unlikely that a solicitor would have relied entirely on a claims consultant to prepare a letter of claim. A solicitor would only have used a claims consultant to input on particular points. As a rough assessment, a maximum of 50% of the disbursement, or 8 hours, should be recoverable (similar to the instructions and liaising with counsel at para. [47(ii)] of Octoesse). 50% of the relevant item is c. £1,000.
I accept that this correctly sets out the principles which I should apply.
In my judgment, the greater part of Mr Judd’s input was likely to be proving technical assistance relating to the proper calculation of the final account. In my assessment an allowance of £1,500 out of £2,177.50 should be made.
Thus the amount due to A & V (subject to a deduction discussed below) is:
Mr Paduraru’s time: £3,800
Court Issue fee: £10,000
Mr Judd’s fees: £1,500
Total: £15,300
Against this must be set the appropriate amount due to J&BH pursuant to paragraph 5 of my Order dated 23 October 2023 that A & V shall pay J&BH’s thrown away as a result of the re-pleading of the case by A & V.
J&BH assesses these costs in the sum of £4,479.45. This figure is explained in paragraph 36 of the Defendant’s Submissions on Costs. In my judgment this is a reasonable assessment.
Accordingly, the net amount due to A & V in respect of the period to 4 December 2023 is £10,820.55 (£15,300 less £4,479.45).
- Heading
- This judgment was handed down by the court remotely by circulation to the parties’ representatives by email and released to The National Archives. The date and time for hand-down is deemed to be 15 No
- The outcome of the proceedings
- The approach to Offers of Settlement
- The Offers Made
- Relevant time periods
- Allocation of Costs up to 4 December 2023
- Allocation of Costs 4 December 2023 to 1 March 2024
- Allocation of Costs 1 March 2024 to 18 June 2024
- Allocation of Costs 18 June 2024 to date
- Summary Assessment?
- Cost assessment up to 4 December 2023
- Cost assessment 4 December 2023 to 1 March 2024
- Cost assessment 1 March 2024 to 18 June 2024
- Copying Costs
- Interest on costs
- Third Party Debt Order
- Set Off
- Construction Industry Scheme
- Conclusions