Costs ruling makes history

Exclusive by Tim Wood



A groundbreaking ruling by an adjudicator that the costs of a claim involving a subcontractor and a contractor were to be met by the defendant could have "far-reaching consequences" for the construction industry, a solicitor involved in the case has warned this week.

The adjudicator ruled in favour of subcontractor John Cothliff Ltd after it brought a case against building contractor Allen Build (Northwest), claiming it was owed money following the completion of work for the company.

The Housing Grants Construction and Regeneration Act 1996 applies to most construction contracts made after May 1998 and imposes certain provisions in relation to payment disputes. The provisions include a mandatory 28-day adjudication scheme to offer a quick method of resolving disputes in the construction industry and that the adjudicator's decision is binding, unless and until it is finally determined either in arbitration or by the courts.

But in the historic hearing at Liverpool Technology and Construction Court on 29 July, the adjudicator effectively ordered that Allen Build must pay the costs, even though the firm protested that the court had "no power to do so" under the Act.

Solicitor Hill Dickinson represented John Cothliff in the case.

David Chinn, head of its construction unit, said: "The court's decision has far-reaching consequences, particularly where a claimant spends significant time and resources in preparing its case for adjudication, or where a claimant wishes to engage its legal representatives on a conditional basis.

"However, this case related to an adjudication under the statutory scheme and therefore it may still be open to the parties to agree that the adjudicator shall have no power to make decisions in relation to costs incurred by them during the adjudication."