Wes Futures Ltd v Allen Wilson Construction Limited  EWHC 2863 (TCC) was one of those occasions where the parties to a dispute were agreed that they had reached agreement, but disagreed as to what that agreement encompassed. To paraphrase someone who we may soon consider a beacon of liberal American foreign policy, there were agreed agreeds and unagreed agreeds.
In short, the Technology and Construction Court (“TCC”) was asked to determine whether an offer made by a Claimant was (1) a valid Part 36 Offer; and (2) whether the Defendant’s acceptance of it made it liable to meet the Claimant’s costs of their adjudication proceedings. The parties agreed they had settled, just not exactly what they had settled.
The primary issue surrounded whether the Claimant’s letter, which purported to be a Part 36 Offer, did in fact meet the criteria. Counterintuitively, the Claimant argued that it did not, and that ostensible deficiencies in its drafting meant that it should be interpreted more broadly (to the advantage of the Claimant). The upshot of it not being a Part 36, said that Claimant, was that its costs of the two adjudications (against the Defendant) would be recoverable from the Defendant. The Defendant disagreed, arguing that this was in fact a valid Part 36 Offer, and that it should only suffer the attendant consequences, i.e. being liable for the Claimant’s costs of the TCC proceedings.
The TCC determined that the Claimant’s letter was, in fact, a Part 36 Offer (and both parties had treated it as such at the times of offer and acceptance). There were deficiencies in its drafting but these were not sufficient to make the offer invalid as a Part 36. As a consequence, the ‘only’ costs which the Defendant was liable to pay the Claimant as a result of its acceptance, were those of the TCC proceedings. Its acceptance did not make it liable to pay the Claimant’s costs of the previous adjudications.
The TCC then went further and said, even if it was not in fact a Part 36 Offer, the wording of the letter meant that it encompassed Court proceedings only. The TCC further clarified that there were two wider principles in operation (1) being that costs in adjudications were not recoverable in accordance with the Housing Grants (Construction and Regeneration) Act 1996, and that (2) costs of proceedings would not normally include the costs of separate stand –alone ADR proceedings (i.e. adjudication).
The decision serves as a reminder that a party’s costs of adjudication will be borne by it alone, and that caution should be exercised when issuing Part 36 Offers if there is an intention, or expectation, to recover other costs incurred during the dispute resolution process.
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