The Edinburgh Royal Joint Venture was set up to design and build a new royal infirmary and medical school. Zenith Contract Interiors was a subcontractor to the defenders for plasterboard partitioning. A provisional liquidator was appointed to Zenith and the subcontract works were novated from Zenith to Deko Scotland. Pursuant to the novation agreement Deko assumed all of the responsibilities and liabilities of Zenith under the subcontract. A dispute arose and an adjudicator issued a decision on 4 September 2002. The adjudication was governed by the ORSA Adjudication Rules 1998 version 1.2, which was subject to a large number of amendments.

*Full details Deko Scotland Limited vs (1) Edinburgh Royal Joint Venture, (2) Morrison Construction Limited, (3) Balfour Beatty Construction Limited (4) Haden Young Limited, 11 April 2003, Outer House, Court of Session.
The only point in issue was the adjudicator's power to make an award in respect of costs and expenses of the adjudication. One of the amendments introduced new clause 21A providing that "the Adjudicator may require any Party to pay or make a contribution to, the legal costs of another Party arising in the adjudication …". The adjudicator ordered Joint Venture to pay half of Deko's costs, including Deko's legal costs. Deko claimed costs in the following categories: claims consultant, surveyor, solicitors, and internal costs.

Reference

Lord Drummond Young held that the power conferred on the adjudicator in rule 21A was confined to "legal costs". These were analogous to judicial expenses and were therefore liable to taxation. The same principals as the expenses of litigation (and adjudication) applied and so that part of the adjudicator's award would not be enforced until costs had been taxed by the auditor of court or were agreed. The pursuer's claim for the expenses of the adjudication was therefore irrelevant to the present proceedings. At paragraph 12 he stated that the remaining parts of the adjudicator's decision may be enforced.

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Postscript

The general rule appears to be that the costs incurred by a party to an adjudication cannot be recovered, unless the parties have agreed in their contract (or in the adjudication proceedings) that costs can be recovered. In this case the contract provided the adjudicator with the power to award "legal costs", which he did. However, this judgment makes it clear that those legal costs are subject to taxation, and that part of the adjudicator's decision relating to costs will not be enforced until taxed.