Cost in Adjudication – are they recoverable?
Costs in adjudication – the current position
Many of you will be familiar with the procedure of adjudication, introduced by virtue of the
‘Construction Act 1996’, as a quick way of settling construction disputes on an interim basis, until
the parties wish to have the dispute settled in the courts.
‘The Old Construction Act’ was silent on who is liable for the parties own legal costs, meaning
that (in the absence of a valid ‘Tolent clause’) the parties are left to bear their own costs of the
adjudication, including legal and expert fees. Leaving aside any debate as to the effect of
S.108A, ‘the New Construction Act’ goes one step further in seeking to remove the parties ability
to agree that costs will be paid by the other (unless made after the notice of adjudication).
Further, in the event that the parties seek enforcement of an adjudicator’s decision before the
court then the costs of that adjudication are still not recoverable as a head of claim (but the costs
of the enforcement are) as to do so would be contrary to the intentions of the Act.
A new development
A recent judgment handed down by Mr Justice Akenhead in the Technology and Construction
Court provides however, that in some circumstances the costs of adjudication will be recoverable
as a head of claim in court proceedings to have the dispute finally resolved, where that dispute
has previously been the subject of an adjudication.
In National Museums and Galleries on Merseyside (Trustees of) –v- AEW Architects and
Designers Ltd the museum was successful in its claim for damages against the architect and the
contractor for defects relating to the ‘steps and seats claim’ as part of the construction of the new
Museum of Liverpool. A small part of the museums claim was to recover its costs of defending a
previous adjudication brought by the contractor, in relation to the contractor’s potential liability for
the design of an element of the works.
Mr Justice Akenhead ordered the architect to pay the museum not only the adjudicator’s fees
and expenses but also a proportion of the museums legal fees in defending the adjudication
(£53,000) and a proportion of the fees paid to its expert in the adjudication (£6,630). At
paragraphs 124-127 of the judgment Mr Justice Akenhead examined issues of foreseeability and
causation and decided:
Foreseeability – adjudication is very well established and it was reasonably foreseeable that
adjudication could be used by the Contractor to resolve the dispute.
Causation – had the architect done its job properly then it was inconceivable that the museum
would have had to defend the adjudication against the contractor; there was therefore a
sufficient causative link between the architects default and the adjudication. The museum has
not acted unreasonably, nor its solicitors negligently, in defending the adjudication (which would
have broken this causative link).
Comment and effect
How strictly this judgment will be limited to its facts remains to be seen, what can be said with
certainty is that in the future parties will attempt to recover adjudication costs in subsequent
litigation, citing this as authority. The court seems to have made it clear that foreseeability will
not be difficult to prove and therefore providing the party can demonstrate causation on the facts,
including that they had not acted unreasonably in defending or bringing an adjudication, they
may be able to recover the costs of the previous adjudication.For advice relating to any
construction law relating issues, please contact our construction team.

This article was written and published on the internet by Alex Rayner of Sintons Law.

This article is intended to provide general information about legal topics. Nothing in this article or in the documents available through it, is intended to provide legal advice. You should not rely on any information contained in this article, or in the documents available through it, as if it were legal advice.

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