costs incurred in preparing a loss and expense claim

If a contractor makes claim for loss and expense under a JBCC contract can he include his costs in preparing the claim?

It is generally accepted that a contractor is not entitled to reimbursement for any costs incurred in preparing a loss and expense claim unless it can be shown that he has been put to additional cost as a result of the unreasonable actions or inactions of the employer.  The rationale behind this is that the contractor is only doing what he has agreed to in the contract:  to provide information to demonstrate that he has suffered actual loss as a result of an event over which the employer had control.

There is little case law, but the case of Michael A Johnston vs WH Brown Construction (Dundee) (2000) does apply such reasoning in the context of a defects claim.  Here, the employer sought to recover the cost of preparing a schedule of defects served on a contractor.  The Scottish court held that the contract provided its own remedy for a contractor’s breach, namely to serve a schedule of defects and to require the contractor to rectify them at no cost to the employer.  Where the contract provided its own method by which breaches can be remedied, it did not follow that the cost of operating that mechanism could be recovered.  The court stated: “What is being sought here is not true consequential loss but is simply the cost of operating the mechanism specifically contemplated by the contract”.

R D PICKLES | Former MEMBERSHIP SERVICES MANAGER