A dispute arose under a construction contract between the appellant architects, Roberts and the respondent developer, Parkcare. The construction contract incorporated the model adjudication procedure published by the Construction Industry Council subject to an amendment to clause 29 made by the RIBA standard conditions. The amended clause 29 provided that "the adjudicator may in his discretion direct the payment of legal costs and expenses of one party by another as part of his decision."

Parkcare referred the dispute to adjudication. However, Parkcare later discontinued its claim and unsurprisingly, Roberts asked the adjudicator for a decision that Parkcare should pay Roberts' costs. Parkcare argued that it was not liable to pay Roberts' costs as the adjudicator could only award costs "as part of his decision", and in light of the discontinuance, no decision had been issued. The adjudicator issued a decision that Parkcare should pay Roberts' costs.

Judge Havery in the High Court agreed with Parkcare and held that while clause 29 provided that the adjudicator could in this instance award costs, those costs were to be awarded "as part of his decision" and no decision had been issued because the adjudication had been discontinued. The adjudicator's decision in respect of costs was therefore not enforceable.

Was Parkcare liable to pay the costs awarded by the adjudicator?

Reference

The Court of Appeal considered that contrary to the view of judge Havery, the meaning of amended clause 29 did not limit the adjudicator's power to award costs to circumstances in which he had made a "substantive contested decision". Their lordships said that if judge Havery was right, then either side could pursue a bad claim or defence through adjudication and throw their hand in at the eleventh hour with no cost consequences. In this case, their lordships said the only commercially sensible reading was that "as part of his decision" in amended clause 29 meant "as part of what he may decide". Parkcare was therefore liable to pay the costs awarded by the adjudicator.

*Full case details
John Roberts Architects Ltd vs Parkcare Homes (No. 2) Ltd, Court of Appeal (Civil Division), LJJ May, Keane and Scott Baker [2006] ECWA Civ 64

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Postscript

The general position is that an adjudicator does not have power to award costs unless the parties have agreed to extend the adjudicator's jurisdiction to include such a power. In its unamended form, clause 29 provided that each party should bear their own legal costs and expenses. Had the parties kept clause 29 in its unamended form then it would have been a different matter. However, the court found that the parties had deliberately adopted a standard form amendment giving the adjudicator power to award costs.