| Date | 16 January 2008 |
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| Judgment | Blue Circle Industries PLC -v- Ministry of Defence (Ch.D 26 November 1996) |
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| The Issue | The recovery of solicitor's and expert consultants' fees as damages. |
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| Implication |
A party can recover as damages, rather than as costs of litigation, the fees of its solicitors and expert consultants for legal and certain other advisory services provided in consequence of an actionable wrong. Such costs would not always be treated as costs of or incidental to litigation proceedings, even if they were incurred with litigation in mind and were of utility in any subsequent litigation. |
printParties to a dispute often incur considerable costs of having to engage solicitors and experts to provide legal and technical advice in consequence of an actionable wrong. The ability to recover such costs is crucially important to a party incurring them. The recovery of this type of cost was one of the matters dealt with in the 1996 case of Blue Circle Industries PLC -v- The Ministry of Defence. Blue Circle owned the Aldermaston Court Estate which consisted of 137 acres and included a listed Victorian Manor House, used as a hotel and modern office building, set in attractive grounds, including a large ornamental lake. The estate adjoined the Aldermaston Atomic Weapons Establishment, part of the MOD, who undertook research, design and production of nuclear devices for the Government. As a result of heavy rain, water from the pond on the Atomic Weapons Establishment site overflowed onto Blue Circles’ estate and a small area of land was contaminated by small quantities of radioactive matter which exceeded regulatory levels. To remedy the contamination, substantial quantities of soil had to be removed from the site. In addition to the substantial engineering operation of removing the contaminated soil, this required the input of, amongst others, solicitors and scientific experts. The MOD accepted responsibility for removing the contaminated material but it did not accept any loss beyond the carrying out of this work. Blue Circle claimed damages under the statutory cause of action provided by Section 12 of the Nuclear Installations Act 1965. Compensation to be paid under Section 12 was to be governed by ordinary common law principles and there was nothing in the Act to suggest any departure from the normal rules governing the assessment of damages. As part of its damages claim, Blue Circle included sums for the costs of: (i) two scientific experts to advise on the extent of the contamination and clean-up works, including the production of a comprehensive report which was used in subsequent litigation proceedings (ii) its solicitors for providing general advice and co-ordinating all aspects of Blue Circles’ response to the contamination incident. Scientific Experts’ Fees Blue Circle claimed as damages the sum of £38,141.00 for work done by its scientific advisors. The Judge was satisfied that they were properly associated with the clean-up operation, arising in direct consequence of the damage caused by the contamination. The MOD argued that it was not possible to claim as damages expenses which are properly regarded as costs of or incidental to proceedings. The Judge rejected that proposition because, in his view, provided it was established that these costs were genuinely and reasonably incurred with the clean-up operation, the fact that they were of utility in the litigation did not prevent them from being properly claimed as damages. The experts’ costs satisfied that test and were claimable in full. The Solicitor’s Fees Blue Circle claimed as damages the sum of £254,530.00 for work done by its solicitors which did not relate to the litigation. They represented the costs of an environmental specialist and four litigation practitioners. These costs were stated as being properly referable to the clean-up operation. In relation to this matter, the Judge also noted that the solicitors had in mind the possibility of litigation from the outset and well before the writ was issued. The key issues dealt with by the solicitors were: health and safety, public relations, remedial works including authorisations to dispose of radioactive waste, dealing with statutory bodies, dealing with the District Council and insurers’ litigation matters and the possibility of obtaining compensation from the MOD. A substantial amount of research and preparation work needed to be done in order to familiarise those involved with the law and technical matters, which was required for the litigation as well as for general advice. The solicitors also oversaw and coordinated every aspect of Blue Circles’ response to the contamination incident. Virtually every letter written by Blue Circle was drafted or reviewed by its solicitors. Accordingly, much of the solicitor’s work was not so much legal advice or drafting, but of the nature of management work. This was considered to be unnecessary and much more expensive than using Blue Circles’ staff. The Judge distinguished between such general management costs, and those relating to matters where specific legal advice or input was required, such as advice on Blue Circles’ legal responsibilities, and on the preparation of the various applications in connection with the clean-up operation. The Judge decided that the latter were a direct and necessary consequence of the contamination incident and the former were not. Accordingly, based on the evidence presented, it was held that about 20% of the solicitor’s costs were reasonably attributable to the clean-up operation. In the result, Blue Circle recovered £90,000.00 of those costs as damages. This case was the subject of an appeal which was dismissed. The Court of Appeal considered that the Judge was right to conclude the solicitor’s costs he allowed were not properly termed costs of the action, and that he rightly allowed them to be claimed as damages. In the circumstances, a party can recover as damages, rather than as costs of litigation, the costs of engaging solicitors and experts to provide legal and certain other advisory services in consequence of an actionable wrong. Such costs would not always be regarded as costs of or incidental to proceedings, even if they were incurred with litigation in mind and were of utility in any subsequent litigation.
CJ-0802
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