Recovering costs of adjudication in subsequent litigation (National Museums and Galleries on Merseyside (Trustee of) v AEW Architects and Designers Ltd and another  EWHC 2403 (TCC)
It has generally been accepted that each party to adjudication bears its own costs, irrespective of the outcome, and that adjudication costs cannot be recoverable, even in subsequent litigation.
The position may now have changed following the case of National Museums and Galleries on Merseyside (Trustee of) v AEW Architects and Designers Ltd and another.
The case concerned a claim against the Architect, AEW, and the Contractor, PIHL Galliford Try JV, for design and construction defects in the Museum of Liverpool.
Prior to the proceedings in the Technology and Construction Court, the claim was referred to adjudication, where it was determined that it was the Architect, not the Contractor, who was liable for design responsibility relating to the steps and seats in the museum.
The adjudicator's fee was paid by the Museum.
Subsequent litigation was commenced by the Museum against the Architect and the Contractor. The Museum claimed, amongst other things, the adjudicator's fee (£19,830), the museum's legal expenses (£95,831); and the expert fees (£6,630).
Sitting in the Technology and Construction Court, Mr Justice Akenhead allowed recovery of the adjudicator's fee in full, together with legal costs and expert fees assessed at £53,000 and £5,160 respectively.
The main issue was whether there was reasonable foreseeability and causation linking the architect's breaches of contract and the adjudication. It was held that:
- if the Architect had done its job properly, it was inconceivable that there would have been any adjudication. It was therefore within the bounds of reasonable foreseeability that there could be adjudication in the circumstances;
- there was a sufficient causative link between the defaults of the Architect and the adjudication;
- the causative link would have only been broken if the Museum had acted unreasonably or if its solicitors had acted negligently in advising the Museum that it had an arguable defence in the adjudication. Neither of these eventualities arose.
Although the case is specific on its facts, it may have wider application in allowing for adjudication costs to be recovered in subsequent litigation, provided they are reasonably foreseeable and caused by the breaches which are subject to litigation.