Re-starting an Adjudication: Second chance - first impressio

What about costs? Referring two adjudications in relation to the same matter means that both sides will incur additional costs but will the referring party be liable for the other side’s wasted costs? The courts have made clear that unless jurisdiction was expressly conferred on the adjudicator, the adjudicator has no power to order one party to pay the other party's costs. O’Farrell J held that “many of the costs incurred in responding to the claims in the first adjudication would have been incurred in responding to the second adjudication” and that generally the costs wasted in abandoned claims will not be recoverable. In this case, however, the ad hoc agreement imposed new and enforceable actions on the parties beyond their existing contractual and statutory duties, meaning that if Jacobs could establish they had wasted or incurred additional costs due to Skanska’s failure to comply with the agreed procedure, they would be entitled to recover those costs as damages. Points for discussion: This case says nothing about the timing of withdrawal. Is it possible to withdraw from the process at a late stage say as late as the eve of the adjudicator's decision, (because, for example, you feel that the decision is likely to go against you, or you have fresh evidence improving your prospects)?

How late is too late?

O’Farrell J suggests that neither the Construction Act nor the Scheme for Construction Contracts (England & Wales) Regulations 1998 (as amended), or the law as it has developed imposes any restrictions on the referring party’s entitlement to withdraw a claim or to commence a further adjudication on the same point where an adjudicator has resigned. Although there are no statutory restrictions, it is likely that, if tested in the courts, a judge would find there are limits on how late withdrawal can take place and the adjudicator asked to resign. Does there need to be a valid reason for withdrawal? Probably not however the reason given by Skanska was held to be unreasonable and, potentially, a very late withdrawal (with no or no valid reason) might not only be unreasonable but also oppressive. Ultimately, your ability to withdraw cleanly from adjudication is dependant on your conduct in the adjudication and the actions of the adjudicator. This case will give some comfort to referring parties who find themselves in difficulty, more especially if it is of the responding party’s making. However careful consideration should be given before withdrawal. At the very least there may be a price to be paid in terms of wasted costs. The costs liability arose out of a failure to comply with the ad hoc agreement. Parties who enter into agreements as to an adjudication timetable should be aware that a default could give rise to an extra statutory costs liability. In general, parties entering into an ad hoc agreement in relation to adjudication should do so with caution. Do you have to give a reason?

If you require advice and support in relation to adjudication, Slater Heelis' Construction, Engineering and Project team can assist.

Katy Ormston, Paralegal katy.ormston@slaterheelis.co.uk 0161 672 1422 Get in touch with our team

Matthew Grellier, Associate Solicitor matthew.grellier@slaterheelis.co.uk 0161 672 1427

Kenneth Salmon, Consultant Solicitor kenneth.salmon@slaterheelis.co.uk 0161 672 1436

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