Member Article

The Technology and Construction Court (“TCC”) decision in National Museums and Galleries on Merseyside (Trustees of) v AEW Architects and Designers Ltd [2013] EWHC 2403 (TCC) was published last month.  In his decision, Mr Justice Akenhead shows much pragmatism in assessing the heads of quantum put forward by the Claimant, which some may view as particularly widely casted.

Background

This case related to defective construction works at the new Museum of Liverpool, which was constructed between 2007 and 2011. AEW Architects and Designers (“AEW”) were sued at the TCC by the Trustees of National Museums and Galleries on Merseyside (the “Museum”) for losses caused by the defective design and installation of steps, seats and ceilings at the Museum.  AEW had originally been sub-contracted to do architectural work on the project but later took over the role of Contract Administrator and were then engaged directly as Architect for the project.  AEW brought in as a third party to the action, the Contractor responsible for carrying out the construction works who had certain elements of design responsibility.

The Judgement

After a thorough analysis of the factual and expert witness evidence given in the case, Mr Justice Akenhead found that AEW had failed to discharge their duties in relation to the steps, seats and terraces which were architectural features and within their contractual sphere of design responsibility.  The Contractor was found liable for the works for which they were responsible.

There were 50 main heads of quantum put forward by the Museum, of which 22 were dealt with in this judgement, which was limited to the steps and seats claims. The heads of claim of particular interest in this judgement relate to Security Costs, Contractor’s Delay costs, Adjudicator’s fees and Internal Management and Staff Costs.

Security Costs

In assessing the claim for the additional security costs attributable to the delays caused by the defender’s negligence, Mr Justice Akenhead took the unusual decision of making a declaration that the Museum was to be indemnified by AEW against damages, losses, expenses or costs payable by the Museum to the Contractor due to AEW’s negligence.

There was an arbitration agreement in place between the Museum and the Contractor which governed the on-going dispute for these costs and as such no evidence had been led by the Contractor as to the extent of their claim.  This meant an accurate estimate of this head of claim could not be ascertained.

In coming to the decision to award indemnity Mr Justice Akenhead noted that “Whilst the Court could theoretically simply say that the Claimant has not proved its case, that would be wholly unfair and contrary to justice”.  He also recognised that while it was in the interests of justice for there to be finality in his judgement, this had to be balanced against the principle that an innocent claimant who is obviously entitled to damages should be fully and adequately compensated, and the court must take appropriate steps to ensure this is done.

Contractor’s Delay costs

The Museum claimed from AEW, the Contractor’s claim for loss and expense in relation to the prolongation arising from the defects issues. The judge held that the Contractor had not yet produced sufficient records vouching that claim. Therefore, as with the security costs, the judge declared that the Museum was to be indemnified by AEW against the Contractor’s claim.

Adjudicator’s fees

Prior to this case, the Contractor had initiated adjudication proceedings against the Museum in order to get declaratory relief that the steps and seats were not their design responsibility. The adjudication was decided in the Contractor’s favour and the Museum was held responsible for the adjudicator’s fee. 

Part of the claim against AEW by the Museum was for recovery of the adjudicator’s fee, their legal fees in the adjudication and the related fees of the experts engaged to give evidence at the adjudication.

In assessing these heads of claim, Mr Justice Akenhead discussed the issues of foreseeability and causation and came to the view that these costs were recoverable.  Had AEW done its job properly it was inconceivable that there would have been any adjudication in relation to the design responsibility of the contractor as the issue would simply have not have arisen.  Furthermore, adjudication was a foreseeable consequence of AEW’s negligence as it was “a fact of life now in construction contracts”.  There was also a sufficient causal link between the defaults of AEW and the adjudication which would have only been broken if the Museum had acted unreasonably or its solicitors had acted negligently in advising the Museum that it had an arguable defence.  As this had not been suggested, the Museum was awarded the adjudicator’s fee and a proportion of their legal and expert witness costs.

Internal Management and Staff Costs

In assessing the cost to the Museum in having to deploy staff to deal with the problems caused by the steps and seats issues, Mr Justice Akenhead came to the view that from the evidence given it was apparent there had been a substantial disruption to the Museum’s business. 

Reviewing the authorities in this area, Mr Justice Akenhead doubted whether it was necessary that staff would have applied their time to activities which would have generated revenue for the claimant in an amount at least equal to the costs of employing them during that time. Nevertheless, he found this to be the case for Museum staff. This was because staff had jobs to do other than dealing with the problems caused by the defective seats and steps (for example the Executive Director of the Museum was also responsible for seven other buildings).  As such, although it could be argued that the Museum would have had to pay the salaries of the staff anyway and therefore incurred no loss, as a matter of causation staff time was equally being incurred for two causes, one the employment and the other the cause of action itself.  This being so, Mr Justice Akenhead allowed recovery of management and staff time in addressing the problems associated with the steps and stairs.

Comments

Whilst no new or unique point of law was discussed in this decision, the approach taken to the assessment of quantum is pragmatic and therefore interesting.  Whilst the judge considered the issues of causation, foreseeability and remoteness, their nuances were not dwelt upon to the extent sometimes seen. Certain heads of claim advanced in this case, such as adjudication costs, are seldom claimed and heads such as staff costs have traditionally been seen to be difficult to advance.  This case may indicate a changing attitude to quantum by the commercial courts. That would be welcomed by many claimants who when successful in their actions are nevertheless left substantially out of pocket.