The Price and Purpose of Adjudication: Money often Costs too Much

As honest Abe once said: “the best way to get a bad law repealed is to enforce it strictly”

The wily old prairie lawyer’s dictum appears to have been taken up by the new Judge on the Bench as Justice O’ Farrell decisively smote the ruin of Adjudication party costs upon the Rolls Building.

The award of party costs in Adjudication has been contentious and ambiguous since Pontius was a Pilate. In my own experience any award of party costs depended on the appointed Adjudicator, actions or inactions of a party, strength of the case and the way the wind blew.

There are several scholarly legal articles tracing the opaque case law history of party costs and the various angles for claiming party costs that have been concocted. These include the European Directive 2011/7/EU on combating late payment in commercial transactions which withered on the vine; and more recently the Late Payment of Commercial Debts Act which enjoyed a brief but bright spell in the sun.

Now with party costs squarely in the industry headlights and the consultation on the Housing Grants Act underway, it is the right time to resolve the matter. Parliament must put its feet in the right place and stand firm. But what is the right place to stand?

The purpose of Adjudication is to administer justice swiftly and economically.

This just and noble purpose has been eaten away at the edges by lawyers making spurious jurisdiction challenges, by parties with deep pockets deploying large multidiscipline dispute teams to develop extensive and sophisticated submissions. Often the stakes are high, and warrant the investment, but it’s the little guy who loses out. There is no fortress strong enough that money cannot take it.

For a dispute worth less than £50k, the light is not worth the candle and we are not far from complex disputes of less than a £100k falling into that uncomfortable caste.

This author believes the principle of keeping Adjudication costs to a minimum is important and the principle of providing access to Adjudication for all is essential.

To bring these conflicting aspirations together is not any easy task. My suggestion is that costs are recoverable on a sliding scale basis, whereby a maximum additional percentage (say 15%) of the sum awarded can be recovered as costs by the successful party, at the discretion of the Adjudicator and subject to evidential, proportionality and reasonableness tests.

This sliding scale approach would keep a lid on costs, enable parties to partially recover costs to make small claims viable, provide a degree of reparation for the wronged party and act as a financial incentive to compel parties to settle disputed matters without recourse to Adjudication.

Whatever the outcome of the consultation, Adjudication was, is and remains a blessed gift for an industry which hitherto had no low cost resolution dispute mechanism. Like honest Abe says:

“We can complain because rose bushes have thorns, or rejoice because thorn bushes have roses.”

_{An article written by Byron Tyson}