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Employer’s taking over the works (clause 10.2).

Delays to completion tests (clause 10.3).

Searches for defects (clause 11.8).

Disputed measurements, rates and prices (clauses 12.3 and 12.4).

Disputed variations (clause 13.1).

Disputed value-engineering amounts (clause 13.2).

Disputed valuation of provisional sum adjustments (clause 13.5).

Dayworks (clause 13.6).

Change of law (clause 13.7).

Fluctuations (clause 13.8).

Delayed payment (clause 14.8).

Disputed payment on termination (clauses 16.4, 19.6 and 19.7).

Consequences of force majeure (clause 19.4).

Any additional payment, under any clause … or otherwise in connection with the agreement (clause 20.1).

Although it is not, at first, clear under the conditions, where the engineer is required to make a determination under clause 3.5, a challenge to that determination might be brought as a claim by the contractor. Equally, a claim may arise from a failure to carry out, or a delay to execution of, an employer’s obligation. This may give rise to a claim based on: inconsistencies between contract documents under clause 1.5; failure on the employer’s part to provide assistance expected with permits and licences under clause 2.2; errors in the employer’s points of reference and levels used for setting out, which an experienced contractor could not reasonably have discovered (clause 4.7); additional cost arising from use of the employer’s equipment and free-issue material (clause 4.20); costs arising from extension of time or delays incurred by authorities (clauses 8.4 and 8.5), costs from suspension, to the extent that it is not the responsibility of the contractor (clauses 8.8 to 8.12); remedying defects to the extent that the requested works are variations (clauses 11.2 and 11.6).

The grounds taken in total appear to cover a wider area than the grounds under other forms, which means that more risks are borne by the employer. On the other hand, the form’s clauses may contain qualifying conditions, such as … which could not reasonably have been foreseen by an experienced contractor, which place limits on the circumstances in which successful claims may be made.

16.3CLAIMS PROCEDURES

Every form of contract permitting the contractor to make money claims lays down certain procedural steps that must be followed if a claim is to succeed. These naturally vary between the forms, and space does not permit us to deal with all the variations. We shall therefore concentrate mainly on the provisions of JCT, merely drawing attention to some aspects of other contracts that are significantly different.

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16.3.1JCT SBC 11

The procedure in chronological order for making a claim for ‘loss and/or expense’ under JCT SBC 05 is laid down by clause 4.23. It is as follows:

1.The contractor considers that:

regular progress of the work has been or is likely to be materially affected by a relevant matter;

because of this (or because late possession of the site has been given), direct loss and/or expense has been or is likely to be incurred; and

the contractor would not otherwise be reimbursed under the contract for this loss and/or expense.

2.The contractor makes written application to the contract administrator, stating the above. The contract does not prescribe any particular form of application, but it has been held in relation to JCT 63 that a valid

application must sufficiently identify the issue on which the architect’s decision is required.5 Naturally, in cases where the architect already knows the relevant facts a very brief and uninformative notice will suffice.

3.The contractor’s application is expected to be made during the execution of the contract, when the disruption becomes apparent, rather than at the end of the contract. Any notice that does not comply with this time limit may simply be ignored by the contract administrator, in which case the contractor may be left to claim damages for any breach of contract that can be established.

4.The contract administrator must then decide whether or not the contractor’s claim is well founded. In deciding this question, the contract administrator may request from the contractor any further information that is reasonably necessary, and the contractor must comply with any such request.

5.A contract administrator who agrees in principle with the contractor’s claim must then ascertain or instruct the quantity surveyor to ascertain the amount of loss and/or expense incurred. Again, the contractor may be requested to furnish such details as are reasonably necessary.

6.Any amount duly ascertained under this clause is added to the contract sum and will therefore feature in the next interim certificate.

16.3.2NEC3 ECC form

Although not immediately apparent, the procedure through which a claim for compensation events is advanced involves two stages. The contractor or the project manager may become aware of an event that could increase the contract sum, delay completion, delay meeting a key date or impair performance in use. Either is to give an early warning notice to the other party. The project manager then records the matter in the risk register. Either party may ask the other, and other people, to attend a risk reduction meeting during which they consider ways of reducing or eliminating noted risks. If outcomes require changes, then those are instructed.

5 Merton LBC v Stanley Hugh Leach Ltd (1985) 32 BLR 51.

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If a compensation event has arisen or has been the subject of an early warning meeting, the second stage is to follow the procedure under clauses 61 to 65 for submitting claims and for their evaluation. This applies to all claims; no distinction is made between claims for the cost of variations and other consequential costs, or indeed other claims for money that are unrelated to variations. The word ‘claim’ is not used.

16.3.3FIDIC 1999 Red Book

The procedure under which claims are made depends on the clauses relied upon. While it appears, at first, that claims for additional cost need only comply with the provisions of clause 20.1 (titled ‘contractor’s claims’), the FIDIC forms can be confusing in that claims, under some clauses, are subject to a separate notification or claims procedure specific to that clause. So, for example, a claim arising under clause 4.12 relating to unforeseeable physical conditions is due to be made under clause 20.1 but must first comply with earlier notice provisions in that clause. Otherwise, the procedure for making claims for additional cost are set out in clause 20.1 and described in Section 14.5.3.

16.4QUANTIFICATION OF CLAIMS

If it can be established that a contractor is entitled to claim, a separate problem is the calculation of the amount of a claim. The issues of entitlement and magnitude should always be separated to make claims procedures easier to manage for everyone involved.

16.4.1Nature of ‘loss and/or expense’ in JCT SBC 11

When it comes to turning a contractor’s claim into money, the courts have made it clear that ‘direct loss and/or expense’, and similar phrases found in other standard form contracts, require an assessment process equivalent to that for an award of damages for breach of contract.6 This means that, where appropriate, the contractor may be compensated, not only for out of pocket losses, but also for loss of profit. However, such an interpretation depends entirely on the wording of the particular contract.

The courts have made it clear that, although claims clauses frequently use the word ‘direct’, the crucial question is whether a particular item of loss falls within the normal rules of remoteness of damage in breach of contract cases. Indeed, the courts appear to have adopted a fairly liberal approach to this question. In

Croudace Construction Ltd v Cawoods Concrete Products Ltd,7 for example, a contract to supply masonry blocks to the main contractors on a school project

6 Wraight Ltd v P H & T (Holdings) Ltd (1968) 13 BLR 26; FG Minter Ltd v Welsh Health Technical Services Organization (1980) 13 BLR 1.

7 (1978) 8 BLR 20.

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stated that the suppliers should not be liable for any ‘consequential loss or damage’ caused by late delivery or defects. When the blocks proved to be defective, the contractors claimed damages for loss of productivity, inflation costs resulting from delay and the cost of meeting a claim brought against them by sub-contractors. The Court of Appeal held that, despite the clause quoted above, the contractors were entitled to recover for all these items of loss.

It should at this point be stressed once again that a claim for ‘loss and/or expense’ is based, not on delay in completion of the works, but on the fact that the regular progress of those works has been disrupted. It is true that most cases do in fact concern delayed completion, and indeed some types of loss can only arise where this is so, but this must be seen as coincidental. Where, despite finishing a job on time, a contractor incurs additional expenses, such as the cost of management time to deal with difficulties caused by the contract administrator’s instructions, or loss of productivity due to the unexpected operations of other contractors on the site, the contractor is fully entitled to claim for these losses.

In Walter Lilly & Co v Mackey8 the court had to consider the extent of proof required for loss and expense claims to succeed. It was noted that a contractor is obliged to submit details which are reasonably necessary for the ascertainment of loss and expense. It does not say how the details are to be provided. What is required is details of the loss and expense and that does not necessarily include all the backup accounting information which might support such detail. It seems now that a large claim should not fail for want of proof of a small element of it.

Clause 26.1 talks of the exercise of ascertainment of loss and expense incurred or to be incurred. The word ‘ascertain’ means to determine or discover definitely or, with certainty. Bearing in mind that the contract administrator and the quantity surveyor are not strangers to the project in considering what needs to be provided to them. One of the exercises which the architect or quantity surveyor may do is to allow loss and expense which has not yet been incurred. They need only be satisfied that the loss or expense will probably be incurred. They do not have to be ‘certain’.

16.4.2‘Immediate’ costs

Where a job is prolonged or disrupted, certain types of loss are instantly recognizable as likely to occur. For example, where working conditions are rendered more difficult (for example because what was intended to be a summer job has now become a winter one), it may be necessary for the contractor to employ additional labour, use extra materials or hire extra plant, simply in order to achieve the same result. Similarly, the prolongation of a contract may mean that materials that would have lasted for the original period deteriorate during the overrun, requiring either replacement or expensive protective measures. Again, the natural effect of inflation may mean that the outlay on both labour and materials is increased because of a delay. Finally, it is fairly obvious that ‘site overheads’, that

8 [2012] EWHC 1773.

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is those general expenses exclusively referable to the contract in question, will be greater if the contract period is lengthened.

All these items may in principle be the subject of a claim. However, three cautionary notes should be sounded:

1.It must be shown that the loss in question has actually been suffered. Thus, for example, any claim for increased labour or materials costs must give full credit for anything the contractor is entitled to receive under a fluctuations clause in the contract.

2.The loss must as a matter of law have resulted from the claim-provoking event. Thus an employer must pay compensation for turning a summer contract into a winter one, but will not be held responsible if the contractor is then caught by some totally independent and unforeseeable disaster, even though this would not have affected the project if the works had been completed on time.

3.Where the contractor’s own plant stands idle in a period of delay, the courts

will not normally uphold a claim based on current hiring rates, but will limit the contractor to a claim based on depreciation and maintenance costs.9

16.4.3Prolongation costs

Where delay has been incurred, contractors invariably claim that their site management team, site accommodation and plant have all been detained on the site for a longer period than planned, and that additional site running costs were incurred. The costs are generally referred to as contractor’s delay costs or prolongation costs because they arise from delay. Ordinarily the contractor has to prove that the period of delay was incurred for reasons which were the employer’s responsibility, and not its own, before recovering the delay-related additional costs.

There are several approaches available for the quantification of prolongation costs:

An agreed weekly rate may be used, where the rate has been inserted in tender documents by the contractor. This approach has been seen in standard forms of contract in Australia and Ireland. A benefit of this method is to provide some certainty to parties over the recoverable amount, and ease of calculation. A difficulty is that the contractor’s actual losses incurred may be vastly different from the agreed amounts, as may occur at the start or end of a project when costs are low, or mid-project when large sub-contractor losses might be incurred.

The additional costs incurred for site overheads may be ascertained for the additional weeks involved. Care needs to be taken with this method to avoid including supervision or plant costs that would have been incurred in any event and which were not additional due to delays.

An approximate weekly cost for site overheads may be ascertained using the contractor’s tender breakdown or the relevant time-related preliminaries amounts.

9 B Sunley Ltd & Co v Cunard White Star Ltd [1940] 1 KB 740.

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A percentage may be used if it has been agreed between the parties that a percentage addition on amounts for variations was deemed to cover all overheads and profit. The difficulty with such an approach is that it might not compensate losses incurred due to delays that were not related to variations.

The approach to valuation of prolongation cost claims under JCT and FIDIC forms is cost-based, which points to calculation of actual additional costs incurred. Although the use of preliminaries or tendered weekly amounts, as evident in a contract sum build-up, is not an accurate way to calculate actual loss, in Walter Lilly it was noted that this approach might have been used even in the absence of proper details of the actual losses.

There is no room under the NEC3 ECC form for the contractor to make a separate claim for prolongation costs because site overhead costs are included in quotations for compensation events as part of either the actual defined cost to date or forecast defined cost under clause 63.1.

16.4.4Acceleration costs

Acceleration is a change to the rate of progress which is implemented by the contractor with the intention of achieving earlier completion than would otherwise have been achieved. A contractor might voluntarily accelerate in the hope of reducing delays that were of its own making. Here, claims for acceleration costs refers to a change in the rate of progress that is requested by the employer or contract administrator to achieve an earlier date for completion. The acceleration might come about in several ways:

1.By an agreement between the parties, recorded in an acceleration agreement which is independent of, and changes, the construction contract. The agreement might record key dates, targets, programmes and cost matters, or might even include changes to other contract provisions like the amount of liquidated damages or changes to completion arrangments.

2.By an agreement for which provision is made under the construction contract. In recent years, standard forms have included some provisions relating to acceleration agreements.

3.An informal arrangement is agreed whereby the contractor will implement measures to accelerate, with a view to recovering delays incurred.

Evaluation of claims for additional costs incurred in acceleration are notoriously contentious. Confusion over what was agreed is not uncommon. It may be that the acceleration measures did not prove successful and that further delays were incurred for which the causes are in issue. There may have been no agreement as to how additional costs might be measured or how much might be recovered in the event of further delays. Worse still, there may be contention over whether earlier causes of delay, which were thought to have been settled, have given rise to fresh claims.

Most standard forms include some provision whereby the contract administrator can instruct the contractor to increase the rate of progress, usually where the contractor is in delay for reasons of its own making. Difficulties can

260 Construction contracts

arise where the contractor subsequently holds the view that delays incurred were due to matters for which an extension of time is due, in which case compensation for accelerative measures might be due. One difficulty is that the contract administrator might not have the authority under the contract to issue any instructions that might be construed as amounting to acceleration. Another is that there may be confusion as to what is really being instructed. Further, the contractor might expect to be compensated for any acceleration carried out even though the word ‘acceleration’ was not used, and there was no agreement on related matters. Although contractors in the USA have succeeded in recovering acceleration costs based on ‘constructive acceleration’, and indeed only under carefully defined circumstances, such a legal basis for a claim has found no express support under English law. It is suggested, at the very least, that contractors in receipt of instructions that might appear to either party to encourage acceleration should seek express agreement that costs incurred will be reimbursed.

The provisions within JCT SBC 11 for acceleration are somewhat obscure. Clause 5.3 enables the contract administrator to ask the contractor for a quotation for a variation. The procedure for providing and accepting such a quotation is set out in Schedule 2 to the form, and Schedule 2 notes that one type of quotation given can be for acceleration. The acceleration quotation should identify the time that can be saved, the amount of the adjustment to the contact sum and any other conditions. Alternatively, instead of providing a quotation, the contractor is to explain why it would be impractical to achieve practical completion earlier than the completion date. The contractor is under no obligation to accelerate until receipt of a confirmed acceptance of its quotation. These provisions should not be confused with the proviso at clause 2.28.6 whereby an extension of time is awarded, provided that the contractor has used its best endeavours to prevent delay. Furst and Ramsey (2012) are of the view that this proviso does not oblige the contractor to take actions that would involve expenditure of significant sums.

In NEC3, under clause 36, the project manager can state a required accelerated date and instruct the contractor to provide a quotation for acceleration to achieve that date. The contractor either submits a quotation or may give reasons for not doing so. If the quotation is accepted, acceleration is implemented.

FIDIC differentiates clearly between its two provisions under which the rate of progress might be increased. If progress is too slow or behind programme the engineer can instruct the contractor under clause 8.6 to describe and implement methods to recover progress, but all of this is to be at the contractor’s own cost. On the other hand, under clause 13.2 (Value Engineering) the contractor may submit a variation proposal for achieving accelerated completion which, if accepted, is then to be implemented. The proposal is to state the proposed work involved, programme modifications and the contractor’s proposal for evaluation of the acceleration variation.

16.4.5Disruption

‘Disruption’ tends to be used to describe losses incurred which are neither losses from delays to completion of the works nor costs that are recovered as the value of variations. Disruption may be understood as inefficiency or loss of productivity. In

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order for such a claim to succeed it is necessary to show that the tender allowance was adequate because, otherwise, had there been no disrupting event, the loss would have been incurred in any event. Second, it needs to be shown that a loss was incurred and, third, that the loss was related to the event complained of.

The calculation of loss is typically taken as the difference between actual performance of a part of the works and the performance that was expected, typically tender allowances. In any proper evaluation, losses arising from any other factors (changes to rates of pay, variations, etc) will need to be discounted. The alternative approach to explaining how a loss arose is to locate a section of work that proceeded without disruption and to compare performance on that section against the work affected by the event complained of. This is the so-called ‘measured mile’ approach.

Losses incurred may, predominantly, be additional sub-contractor costs. The difficulty here is to show that the reasons for loss complained of by the subcontractor under the sub-contract correlate with the reasons for loss complained of by the main contractor under the main contract. It may, in this context, be necessary to show not only that a settlement with a sub-contractor was a reasonable one but also to show that the settled claims include the details of exchanges before settlement, rather than simply relying upon a settlement agreement.

As with prolongation costs, the JCT and FIDIC conditions anticipate cost-based claims only. And for the reasons given above, there is no room under the NEC3 ECC form for the contractor to make a separate claim for disruption.

16.4.6Head office overheads and profit

Any disruption to the regular progress of work under a contract may lead the contractor to incur administrative costs, such as the diversion of managerial time and effort, at head office. If so, these costs may justifiably be claimed, but it will not be simply assumed that such losses have been suffered. They must be specified and properly supported by the evidence, for example by records of the time spent by individuals in dealing with the particular problem.10

Where the contract period is prolonged by something for which the employer is contractually responsible, the contractor may also seek to claim in respect of general head office overheads. The contractor’s argument here is either that the contract is making a smaller contribution to these business expenses than it should, or that the organization is being tied up for a longer period on the present project so as to prevent it from earning the necessary contribution to head office expenses elsewhere from new projects. Identical arguments are used to support a claim for lost or diminished profits, which, it is said, should have been earned from the contract in question.

Ordinarily, claims for loss of contribution to head office overheads and to profit are recoverable, unless contract terms denote otherwise. Hence, particular care should be taken as contract terms may limit recovery. Under FIDIC 1999 Red Book the clauses permitting a claim to be made refer specifically to cost. These do

10 Tate & Lyle Food and Distribution Co Ltd v GLC [1981] 3 All ER 716; Babcock Energy Ltd v Lodge Sturtevant Ltd [1994] CILL 981.

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not include profit, as cost is defined in such a way as to rule out any profit element. Under NEC3 the basis for recovery of all compensation events under clause 63.1 is the actual and/or forecast defined cost, plus the fee, where the fee is calculated as a percentage addition to the defined cost. The fee is said to include all head office overheads and profits and therefore might be said to preclude recovery on the basis described below.

In practice, because of the enormous difficulties of accurate quantification, contractors’ claims under this heading tend to adopt a ‘formula’ approach. A notional daily or weekly contribution from the contract in question to general business overheads and profits is identified, and then multiplied by the number of days or weeks for which the contractor is entitled to claim. While the defects of such an approach are obvious, the courts regard it as generally acceptable, provided that any formula used is not applied blindly and without reference to the realities of the situation. Moreover, it is important to emphasize that the onus is on the contractor to prove that actual loss has been suffered. It was ruled in Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd11 that the contractor must be able to show that the organization could have worked elsewhere during the period of delay (that is, that there was work available in the construction industry generally). Where a contractor can show that it has lost the opportunity to earn overheads from other projects which it would have worked on had it not been delayed, then recovery of a formula basis will be permitted.12

As mentioned, a ‘formula’ approach to this aspect of a claim is centred on the identification of a head office overheads and profit contribution from the delayed contract. Where the three best-known formulae differ is in their method of identifying the appropriate percentage.

1.The Hudson formula (named after the leading textbook in which it first appeared) (Wallace 1995) reads as follows:

	Overheads/profit percentage	×	Contract sum	× Period of delay
	100		Contract period

What this means is that the claim is based on the allowances actually made by the contractor in tendering for the contract, notwithstanding that these may of course have been unreasonably optimistic or pessimistic. This formula has been applied in a Canadian case,13 and has now also been approved by English courts.14

2.The Emden formula (named after another well-known textbook) (Bartlett et al. 2002) reads:

	Total overheads/profit	×	Contract sum	× Period of delay
	Total turnover		Contract period

11(1970) 1 BLR 111.

12Compact Metal Industries Ltd v PPG Industries (Singapore) Pty Ltd [2012] SCHC 91; Walter Lilly & Co Ltd v Mackay [2012] EWHC 1773 (TCC).

13Ellis-Don Ltd v Parking Authority of Toronto (1978) 28 BLR 98.

14JF Finnegan Ltd v Sheffield CC (1988) 43 BLR 124. Walter Lilly v Mackay (2012) 1773 EWHC (TCC).

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Here the figure used is the percentage that is relevant to the contractor’s whole organization, found by dividing total overhead cost and profit by total turnover. This approach, which of course ignores the question whether the particular contract was more or less profitable than usual, has been accepted by an English court in Whittall Builders Co Ltd v Chester-le-Street DC.15 Ironically, it was also actually applied in the Finnegan case,16 although the judge there claimed to be using the Hudson formula.

3.The Eichleay formula (Wallace 1986), which is named after the US case in which it was first put forward, is more complex. It reads:

	(a)	Contract invoices × Total overheads/Profit = Allocable overhead
		Total invoices
	(b)	Allocable overhead	= Daily contract overhead
		Days of performance

(c) Daily contract overhead × Days of delay = Amount recoverable

This approach is widely used in the USA but does not yet seem to have appeared in the UK. Although more refined than the Emden formula, it is subject to the same criticism of ignoring any special features of the particular contract.

16.4.7Interest and financing charges

Common law has always refused to permit a creditor to claim either damages or interest for the mere fact of being kept out of money due by the debtor’s late payment.17 As a result, it was for a long time open for a debtor to avoid any further liability by paying the bare amount of a debt at any time before judgment was awarded.

The worst of this rule has now been removed by statute in respect of both litigation (Supreme Court Act 1981, section 35A) and arbitration (Arbitration Act 1950, section 19A). These provisions enable interest to be awarded wherever a debt was still unpaid when proceedings for its recovery were commenced. However, where payment is made late but before proceedings are launched, it has been reluctantly confirmed by the House of Lords that the common law rule still applies; the claimant in such circumstances is not entitled to either damages or interest.18

Rather questionably, perhaps, the lower courts have for some time been prepared to ignore the basic rule in cases where a claimant has suffered ‘special damage’ from late payment, for instance by having to pay interest on an overdraft which could have been cleared or reduced if the debtor had paid up. This escape route has now been seized upon in construction cases to justify claims by

15(1988, unreported).

16JF Finnegan Ltd v Sheffield CC (1988) 43 BLR 124.

17London, Chatham & Dover Railway Co v South Eastern Railway Co [1893] AC 429.

18President of India v La Pintada Cia Navegacion SA [1985] AC 104.

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contractors, as part of ‘direct loss and/or expense’, for what are termed ‘financing charges’. In FG Minter Ltd v Welsh Health Technical Services Organization,19 a claim of this nature was upheld by the Court of Appeal. This was on the ground that, since the loss of interest which he has to pay on the capital he is forced to borrow and on the capital which he is not free to invest would be recoverable for the employer’s breach of contract, it was equally recoverable under JCT 63.

The Minter decision was applied by the Court of Appeal in Rees & Kirby Ltd v Swansea CC,20 where the court came to the realistic conclusion that such a claim should be assessed on the basis of compound rather than simple interest. It was also followed, after detailed analysis, in the Scottish case of Ogilvie Builders Ltd v Glasgow City DC.21 Under English law, the present position is, therefore, that if there is no express right to interest, it may be included as part of a claim for loss and/or expense if there are contractual provisions which allow such claims. Recovery on this basis requires proving a loss has been suffered as a result of the delayed or missed payment. This is typically approved by how costs arising due to the non-payment were financed.

In contract, interest can be recovered through an express clause on any sums due under the construction contract. There may be preconditions which need to be settled, such as making a written demand. The date when interest starts to be earned is usually from the final date for payment rather than the date the completion certificate is issued. Express provisions for recovery can be found in JCT SBC 11, which provides for simple interest (clauses 4.12.6 and 4.15.7). The NEC3 ECC form, at clauses 51.2 and 51.3, allows for interest calculated daily on an annual compound rate. In FIDIC 1999 Red Book, at clause 14.8, the contractor is entitled to receive what are termed finance charges in the event of late payment, with charges on a compound basis at 3% above the discount rate of the country of the currency payment. Such a claim can be made without notice.

The Late Payment of Commercial Debts (Interest) Act 1998 may apply if the contract does not address the issue of interest. The Act provides a high rate of interest at 8% above the Bank of England base rate, but does not apply to consumers. In addition, it cannot be used for claims for damages due to breach of contract unless the damages are based on a contractual right to be paid.

Interest can also be a separate category of damages in its own right. Interest in the commercial world is paid on a compound basis. This means that, as interest accumulates to the principle amount any future interest becomes payable on that amount too. In a 2007 case, the House of Lords confirmed that it is only fair that, in certain circumstances, interest would be recoverable as damages on a compound basis.22

19(1980) 13 BLR 1.

20(1985) 30 BLR 1.

21(1994) 68 BLR 122.

22Sempra Metals Ltd v Revenue & Anor [2007] UKHL 34.

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16.4.8Costs of preparing a claim

Nowadays, contractors’ money claims have become of enormous practical importance, and something of a ‘claims industry’ has grown up to assist in the preparation and presentation of such claims. Where ‘claims consultants’ are employed in this way, their services may themselves constitute a considerable cost to the contractor, and a question which has arisen is whether these costs can then be recovered as part of the claim.

The answer, in principle, appears to be that, since a contractor is not required under most standard-form contracts to make a detailed claim for loss and/or expense, any costs incurred in so doing should not themselves be recoverable.23 However, where compliance with the contract administrator’s or quantity surveyor’s request for further evidence involves an unusually heavy amount of managerial time, this can probably be recovered.24

23James Longley & Co Ltd v South West Thames RHA (1983) 127 SJ 597.

24Tate & Lyle Food and Distribution Co Ltd v GLC [1981] 3 All ER 716.

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