Northern Developments (Cumbria) Limited -v- J & J Nichol

Whilst in general an adjudicator did not have the jurisdiction to decide that one party's costs of the adjudication should be paid by the other party, the adjudicator in the instant case was granted such jurisdiction by the parties' implied agreement
 
The adjudicator made an award in the sub-contractor's favour. He also decided that the contractor should pay the sub-contractor's costs of the adjudication and the adjudicator's fees. Judge Bowsher held that whilst in general an adjudicator did not have the jurisdiction to decide that one party's costs of the adjudication should be paid by the other party, the adjudicator in the instant case was granted such jurisdiction by the parties? implied agreement. Judge Bowsher in giving his reasons for this finding stated that nowhere in the Construction Act 1996 or in the Scheme for Construction Contracts was the adjudicator given the power to award costs. Judge Marshall Evans was wrong in John Cothliff v Allen Build (1999) to decide that the adjudicator had the power to award costs of the adjudication insofar as if Parliament had intended by the Act or the Scheme to give the power to award costs, it would have said so. The adjudicator's jurisdiction was derived from contract, albeit a contract imposed by the Act, in the form of the Scheme in the event of the contract not complying with the Act's requirements by reason of section 114(4) providing that the terms of the Scheme were to have effect as implied contractual terms. The parties were free to add their own contractual terms provided that such terms did not detract from the requirements of the Act and the Scheme and there was no reason why they should not agree to the adjudicator having the power to award costs. In the circumstances of the instant case there was an implied agreement that the adjudicator should have the jurisdiction to award costs insofar as one party was represented by experienced solicitors and the other party was represented by experienced claims consultants, both parties asked for their costs and neither party submitted that he had no jurisdiction to award costs. Advice Note There is a divergence of judicial opinion at first instance as to whether an adjudicator has an implied power to order a party to pay the other party's costs of the adjudication where the Scheme for Construction Contracts applies. It is generally believed that Judge Bowsher was correct in finding that adjudicators do not have such a power.
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