I have recently been appointed as an Expert Witness for quantum in an Arbitration in which the Claimant is seeking recovery of the costs incurred in preparing his claim - by no means an unusual state of affairs. I have been asked my opinion as to whether the Claimant is entitled to be paid such costs. The preparation and assessment of claims is a significant part of our business, and the extent to which our costs may be recovered by our clients is of considerable interest to both of us.

In my capacity as Expert Witness on quantum I am not, of course, required to decide whether such costs are recoverable or not. That decision is for the Arbitrator. I can only give an Opinion as to the actual amount of the claim - were the claimed costs actually and reasonably incurred. However, I may well be examined on my views on this particular matter in addition to my formal Opinion on quantum.

So do I consider such costs are recoverable? My answer is that it all depends. Contracts generally provide for additional work by variations, and for the submission (and therefore preparation) of claims by the Contractor in proper response to certain events. For example, where the Employer is in breach by not providing due information in time to avoid disrupting the works, then the Contractor has contracted to prepare and submit sufficient information (i.e. a claim) to enable his entitlement to damages to be fairly assessed.

The basic legal entitlement in the event of breach is that the sufferer is to be restored, so far as payment will allow, to the position he would have been in had the breach not occurred. It would follow that his claim preparation costs must therefore be reimbursed as an element of his damages. But when such claims are contemplated in the contract, it may be argued that the Contractor has provided for the necessary resources within his rates and prices. He has an administrative or management structure in place for dealing precisely with such matters. He may employ permanent specialist legal staff to advise in such circumstances. When those resources are brought to bear on a particular claim issue, the Contractor does not suffer additional cost thereby, since he incurs the cost of those resources anyway, so he sustains no damages in that respect. In my view that is an acceptable argument, subject to degree. The Contractor should absorb the claim preparation costs to the extent they may be reasonably considered to have been within the contemplation of the parties.

It follows then, that if the Contractor finds it necessary to solicit outside assistance for the proper preparation of his claim, then such costs would not fall within that category and he should reasonably be entitled to reimbursement.

He would, of course, need to show that he does not have the in-house resources or necessary expertise available - he cannot be allowed to duck out of his contractual obligations without good reason. Similarly, if the deployment of in-house resources is significantly greater than what might reasonably have been contemplated, then he should be entitled to claim the excess.

A rather different situation exists when the claim arises from a breach which is not contemplated in the contract. I suggest in such cases the Contractor is entitled to recover his entire demonstrated costs, subject to the normal legal provision with regard to damages. In that event he would need to ensure that both in-house and external staff allocation were carefully identified, allocated and recorded.