Can you recover your costs of an adjudication?

The Construction Act rule

Section 108A of the Housing Grants, Construction and Regeneration Act 1996 restricts contractual terms allocating adjudication costs. In broad terms, such an agreement is ineffective unless it falls within the statutory exceptions, including an agreement made after the Notice of Adjudication.

The Late Payment Act argument

Section 5A of the Late Payment of Commercial Debts (Interest) Act 1998 can entitle a creditor to reasonable recovery costs for a late debt. In Enviroflow Management Ltd v Redhill Works (Nottingham) Ltd [2017] EWHC 2159 (TCC), the court held that an adjudicator could not use that route to award a party its adjudication costs contrary to section 108A.

In Aqua Leisure International Ltd v Benchmark Leisure Ltd [2020] EWHC 3511 (TCC), the TCC confirmed the same approach.

What this means in practice

• Budget on the basis that your own adjudication costs will not be recovered.
• The adjudicator’s own fees can be allocated between the parties.
• The parties can agree a costs arrangement after the Notice of Adjudication, if both agree.
• Outside adjudication, section 5A may still be relevant to ordinary debt-recovery costs.
• For lower-value claims, consider capped-fee adjudication procedures and a defined solicitor scope.

This article summarises the position in the authorities cited and should be checked against any later authority before reliance.