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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Price & Anor v Carter (t/a Ian Carter Building Contractors) [2010] EWHC 1737 (TCC) (13 July 2010) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2010/1737.html Cite as: [2010] EWHC 1737 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		13/07/2010

The Honourable Mr Justice Edwards-Stuart :

Introduction

1. On 10 June 2010 I heard two sets of applications in these proceedings. First, the Claimants' application for permission to appeal the award of an arbitrator made on 8 March 2010. Second, the Defendant's applications for summary judgment to enforce the award and to transfer the proceedings originally started in Truro County Court to the TCC in London.
2. At the outset of the hearing, it was accepted that the application to transfer the enforcement proceedings to London should be granted. The outcome of the enforcement proceedings depended solely on whether the Claimants (Mr and Mrs Price) were successful in their claim to have the award set aside.
3. By a judgment handed down on 18 June 2010 I granted Mr and Mrs Price an extension of time but I dismissed their application to set aside the award with costs, and I directed the parties to make written submissions in relation to the assessment of those costs. The Defendant (Carter) has submitted a "Re-Revised Statement of Costs" dated 24 June 2010. Mr and Mrs Price have made written submissions in relation to this schedule to which Carter has responded.
4. The Statement of Costs is divided into two parts. Part A concerns the enforcement proceedings. Part B concerns the arbitration application. In relation to Part A, the sum claimed is £2,574.87, and in relation to Part B, the sum claimed is £15,534.50. The total costs therefore amount to £18,109.37.
5. I shall take the two sets of proceedings separately.

Part A - the enforcement proceedings

6. No challenge is made to the hourly rates claimed, which is hardly surprising since for fee earners of grades A (partner) and D (trainee solicitor), the rates claimed are lower than those that prevail in Truro and, by comparison with London, the rate claimed for grade A is less than 50% of the prevailing rate in London and for grade D it is about 70%. The solicitor instructed by Carter was not a construction specialist and accordingly was able to charge very much less than those who specialise in this type of work in London. Having regard to that, I consider that it is fair to allow rather more time on matters such as work on documents than might be taken by a specialist because there is still likely to be a substantial saving overall.
7. Mr and Mrs Price assert that the sum of £4,612.37 claimed in Part A is wholly excessive and disproportionate to the nature of the applications and the relief sought. If that was indeed the sum claimed, they might have had a point. However, Mr and Mrs Price have made a simple arithmetical error by counting the total solicitors' costs twice: they have added the sum of £2,037.50 to the total of £2,574.87, when in fact the former is simply a component of the latter. Looking at the matter overall, a figure in the order of £2,500 seems to me to be reasonable for the costs of enforcing the award and transferring the proceedings from Truro to London.
8. Mr and Mrs Price also take a number of detailed points, mainly by way of objection to the fact that Carter's solicitors went to the court to issue the applications in person, rather than sending them by post. The short answer to this is that local experience has shown that applications sent by post to the Truro County Court can take several days to be processed and Carter was concerned that Mr and Mrs Price might be planning to sell their house so they felt that there was some urgency.
9. I can see nothing in these objections. In my judgment, Carter's solicitors were justified in issuing their claim and applications in person. Not only does this speed up the process but also they could be confident that it had been done. The other objection is to counsel's fees in the sum of £185 in addition to earlier fees of £150. Mr and Mrs Price submit that counsel's involvement in respect of the enforcement applications was "merely to ensure that those applications were before the Court and dealt with at the hearing on the 10th June". I do not think that this is correct. Counsel instructed by Carter was a construction specialist and in my view it was perfectly reasonable to seek her advice on these procedural aspects. The total amount claimed of £335 is not excessive.
10. In relation to work done on documents, 1.8 hours is claimed for the partner, and 12.3 hours for the trainee solicitor. In relation to the latter, this is said to be broken down as to 8.6 hours in relation to the enforcement of the arbitrator's award and 3.7 hours in relation to the application for expedition. Mr and Mrs Price accept that the partner's time is reasonable, but they claim that the trainee solicitor's time should be reduced to 2.3 hours.
11. I regard this last submission as untenable. Arbitration claims do not crop up every day and I would not necessarily expect a trainee solicitor in a commercial firm in London to be familiar with the procedure. I would certainly not expect a trainee solicitor in Truro to be familiar with the procedure. I accept that a little over 8 hours is a fairly long time to do the necessary research and to draft the applications and the supporting witness statement, but it is not so long that I can describe it as unreasonable for a non-specialist.
12. I therefore reject the various objections made on the half of Mr and Mrs Price to Part A of the Statement of Costs. I consider that the amount claimed of £2,574.87 is entirely reasonable.

Part B - the arbitration claim

13. The first item to which objection is taken is the 4.1 hours on attendances on others, being 2.5 hours for the partner and 1.6 hours for the trainee solicitor. Carter says that 1.5 hours of this was taken up in dealing with both the Truro County Court and the TCC in London and 2.6 hours was taken up in discussing matters with counsel and with counsel's clerk. I do not regard any of this time as unreasonable.
14. The major attack made by Mr and Mrs Price is in the work done on documents which amounts to 24.9 hours. Of this 17 hours was spent by the partner, 6.3 hours by the trainee solicitor and 1.6 hours by a paralegal. In addition to this, it looks as if about 10 hours of counsel's time was also involved.
15. I should say at once that one of the problems with the application made by Mr and Mrs Price was the manner in which the documents were prepared. They were divided into 8 lever arch files, known as Books 1 to 8, and two further files, known as File 1 and File 2. Leaving aside the fact that these files contained a substantial quantity of material that I regarded as irrelevant to the issues arising on the appeal, I found them to be arranged in a very inconvenient order. Writing the judgment took much longer than it should have done as a result of the difficulty in locating documents. I would not be in the least surprised if Carter's solicitors encountered similar difficulties when reading the documents and preparing their response, and I shall bear this point in mind when considering the points made by Mr and Mrs Price.
16. In support of their application to set aside the award Mr Price made an 8 page witness statement running to 56 paragraphs. He made a second witness statement in response to the evidence served on behalf of Carter, and this statement ran to 39 pages and 146 paragraphs. Attached to this statement were about 20 pages of exhibits.
17. Clearly this material would have required considerable time to absorb and analyse and thereafter to prepare a response. The witness statement in response, made by Mr Pearse, the partner in the firm of solicitors instructed by Carter, ran to over 30 pages and 122 paragraphs.
18. Matters were not made any easier because the grounds of the attack on the award were wide ranging. They included allegations that the arbitrator had exceeded his jurisdiction, that there were several serious irregularities during the conduct of the arbitration and that he had made an obvious error of law. Inevitably, these involved getting into considerable detail and this was bound to be a time consuming exercise. In addition, at the hearing Mr and Mrs Price were seeking an extension of time for lodging their appeal, not having claimed this in their Claim Form.
19. Given the wide ranging allegations of misconduct made by Mr and Mrs Price, the length of the witness statements produced by Mr Price and the inconvenient format in which they chose to present the documents, I do not consider that it lies in their mouths to complain about the amount of time spent by Carter's lawyers in responding to the material presented in support of the claim. In Mr Price's witness statements parts of the award were analysed in detail and every point had to be considered by Carter's lawyers.
20. I remind myself that CPR 44.4 provides that the court is not to allow costs which have been unreasonably incurred or are unreasonable in amount. CPR 44.4 (2) provides that where costs are being assessed on the standard basis the court will (a) only allow costs which are proportionate to the matters in the issue and (b) resolve any doubt which it may have as to whether costs were reasonably incurred or reasonable and proportionate in amount in favour of the paying party. By contrast, where costs are being assessed on the indemnity basis, the court is to resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.
21. In relation to the arbitration claim, Carter is seeking the total sum of £15,534.50, which seems to me to be entirely reasonable and proportionate in the context of the enforcement of an award in excess of £100,000, not a penny of which had been paid.
22. In relation to the 24.9 hours spent working on documents by Carter's solicitors, I have no doubt that these costs were reasonably incurred in all the circumstances. As to the amount of time spent, I do not consider that it was unreasonable for Mr Pearse either to draft his own witness statement or to read the files of supporting documentation submitted by Mr and Mrs Price. Given that the exercise involved a consideration of the conduct of the arbitration in its entirety, I consider that it was reasonable for Mr Pearse to have spent the equivalent of about two days on the case. In addition, the 8 hours spent by the trainee solicitor and the paralegal does not seem unreasonable.
23. Mr and Mrs Price object also to the amount of counsel's fees. Counsel, as well as solicitors, had to consider the 10 ring binders of documents, the witness statements prepared by Mr Price and two skeleton arguments prepared on behalf of Mr and Mrs Price (a 14 page skeleton argument in support of the application for an extension of time, plus a chronology, and a 28 page skeleton argument in support of the appeal). Counsel's brief fee was £5,000. This does not seem to me to be unreasonable given the importance of the hearing and the volume of material that had to be absorbed. I was provided with a thorough and helpful skeleton argument by Carter's counsel.
24. Finally, 3.5 hours is claimed for preparing the Statement of Costs. 2.5 hours were spent by a paralegal, 30 minutes by the trainee solicitor and 30 minutes by the partner. The length of time charged by the paralegal does seem a little high, but it is offset by the fact that the paralegal's hourly rate is half that of the trainee solicitor. If the latter had been able to do that work in, say, 1.5 hours, the overall saving would have been minimal.
25. For these reasons, I conclude that the £15,534.50 incurred in Part B was reasonably incurred and is not unreasonable or disproportionate in amount.

Interest, and standard or indemnity costs

26. Since I consider that the costs claimed, when assessed by reference to the standard basis, are reasonable, the question of whether Carter's costs should be assessed on an indemnity basis is academic so I will deal with it only briefly.
27. The arbitrator awarded Carter £96,984 plus VAT. In addition he directed that Mr and Mrs Price should pay the arbitrator's fees, amounting to £14,172. He ordered that if Carter had paid any part of these fees it was entitled to recover that amount from Mr and Mrs Price. Carter had paid £11,728.40 in respect of the arbitrator's fees, so that the sum that it was entitled to recover under the award was £108,712.40.
28. Subject to one point, I regarded every point taken by Mr and Mrs Price in relation to the appeal as being without merit. The one point that I regarded as having some merit failed because some of the factual ingredients required for its success were not made out. I granted Mr and Mrs Price an extension of time, although this had not been claimed in the Claim Form because they asserted that the claim was in time (having received an extension of time from the arbitrator, so they contended). However, my reasons for doing so differed to some extent from those put forward and, all in all, I do not consider that this should effect any substantive decision in relation to costs.
29. On 16 January 2009 Carter made a Part 36 offer in the sum of £100,000 in a full and final settlement of all claims and counter claims that the parties had or might have against one another. The letter stated that the offer took into account the possibility that Mr and Mrs Price might be unwilling and/or unable to pay any amount awarded by the arbitrator including interest, costs and the arbitrator's costs. Mr and Mrs Price made a counter offer in the sum of £20,000.
30. In fact, the net recovery by Carter was about £3,000 less than its offer. However, viewed from the point of view of Mr and Mrs Price, in order to save that £3,000 they have had to pay the arbitrator's fees in a sum that significantly exceeded £3,000.
31. CPR 36.14 (1) applies where either a claimant fails to obtain a judgment more advantageous than a defendant's Part 36 offer or where the judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant's Part 36 offer. It is evident that neither applies here: the claimant in the arbitration, Carter, clearly obtained an award that was much better than Mr and Mrs Price's offer, but it did not obtain an award that was more advantageous than its own offer. I do not consider that, from Carter's point of view, the arbitrator's own fees are relevant because the amount in respect of those fees that Mr and Mrs Price have been ordered to pay is simply to reimburse Carter for money that it had paid the arbitrator in advance. In real terms, Carter has been awarded some £3,000 less than its own offer.
32. However, the CPR do not apply to arbitrations although an arbitrator would be entitled to have regard to the provisions of the CPR when considering any questions of costs. But on this application it is the powers of the court, not those of the arbitrator, that are under consideration.
33. It seems to me that I should ask myself what, if anything, Mr and Mrs Price have gained by the pursuit of the arbitration to award and thereafter by pursuing the application for permission to appeal. The answer is clearly nothing. Carter, by contrast, made a reasonable offer at the outset: even if it was for slightly more than they subsequently recovered, it represented more than Mr and Mrs Price eventually paid. Unless Mr and Mrs Price made a realistic sealed offer, they were always going to have to pay not only the net sum recovered by Carter but also the fees of the arbitrator. That is a factor that they should have taken into account when considering Carter's offer (as they were invited to do). Unless the difference between Carter's offer and the sum awarded by the arbitrator exceeded the fees of the arbitrator that Mr and Mrs Price would probably have to pay, there would be no commercial advantage in resisting Carter's claim in the arbitration. On the other hand, in the absence of any realistic offer from Mr and Mrs Price, Carter had no choice but to pursue the arbitration to award.
34. It seems to me, therefore, that Carter should be treated for the purposes of this appeal as a party whose Part 36 offer has not been bettered. In these circumstances, one of the provisions of the CPR requires the court, unless it considers it unjust to do so, to order interest on the whole or part of any sum of money awarded at a rate not exceeding 10% above base lending rate: see CPR 36.14(3).
35. This appeal should never have been brought. In these circumstances, it seems to me fair and just, and certainly not unjust, to award Carter interest at an enhanced rate from the latest date by which these proceedings should have been issued, namely 5 April 2010, until date of payment. I consider that the rate of interest should be 10%.
36. As to the question of indemnity costs. I would have been prepared to award costs on this basis if it had been necessary to do so. However, since I consider that Carter is entitled to the full amount of the costs claimed when assessed on the standard basis, the question of indemnity costs does not arise. In my judgment, on the facts of this particular case, it makes no difference whether I award costs on the standard basis or on an indemnity basis.
37. I should make it clear that I am only concerned to deal with the costs of the appeal and the question of interest for the period during which Carter has been kept out of its money as a result of the bringing of this arbitration claim. The arbitrator's award of 8 March 2010 specifically excluded all of questions of costs and interest.
38. The costs of the arbitration are a matter for the arbitrator, together with interest up to 5 April 2010.