The Trustees argued and this was the main issue in the case, that the level of ATE costs cover was far too low, their estimate of the likely costs being £800,000. They also argued that the ATE should extend to the costs of any appeal. On the question of the estimated costs of the arbitration, and the Trustees figure of £800,000 the claimant raised the following points on which the court made the following findings: 1. The relevant contract provided for an arbitration process designed expressly within the applicable arbitral rules to be cost effective and flexible. Either party could apply for a costs capping order, and the arbitrator’s powers included the ability to order costs to be limited in an equivalent way to those that were familiar to normal civil litigation. Potential costs recovery would be of a reasonable amount in relation to costs reasonably incurred. The court agreed with the claimant that such matters were both relevant and material to the assessment of the level of costs protection to be provided on the application of the Meadowside principles in the present situation. 2. The claimant submitted and the court accepted that a great deal of the work done for the adjudication could be re-used in the arbitration leading to savings in the Trustees’ costs of the arbitration. Though not a re run of the adjudication, and despite the differences in process, the underlying issues were likely to be the same and based on the same factual and expert evidence and analysis of delay and quantum.
3) Adequacy of ring-fencing and security for costs - Insolvency – Administration – Enforcement: Styles & Wood (in Administration) v GE CIF Trustees [15] The defendant Trustees had engaged the claimant contractor Styles & Wood under a JCT Contract D&B 2016 Contract for a project in Manchester. The claimant went into Administration in January 2020 and commenced the adjudication in February 2020 in which they sought payment for certain variations, an extension of time and loss and expense. The claimant now applied to enforce payment of the sum of £700,000 awarded to them by the adjudicator. The court referred briefly to the judgment of the Supreme Court in Bresco v Lonsdale[16] and to the case of Meadowside[17] on the question of satisfactory security and stated: “It is worth emphasising that the key aspect in relation to whether or not to enforce is the protection of the right to set off.” The court was also referred to the case of Balfour Beatty v Astec Products Ltd (in liquidation)[18] deciding that it was no more than an application of the principle to its own facts.
In this case the Administrators had decided to enforce the award and had offered an undertaking to ring fence the amount of the award together with an ATE policy for £200,000 in respect of the costs they submitted were likely to be recoverable in final account proceedings at arbitration. [15] In the Central London County Court judgment 4 September 2020
[16] Bresco Electrical Services Ltd (In Liquidation) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25. [17] Meadowside Building Developments Ltd (in liquidation) v 12-18 Hill Street Management Co Ltd [2019] EWHC 2651 (TCC) [18] [2020] EWHC 796 (TCC)
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