When statutes collide: potential recovery of own party adjudication costs

• Author: Tony Hetherton, Jennifer Charlson
• Position: Department of Architecture and the Built Environment, University of Wolverhampton, Wolverhampton, UK; Department of Architecture and the Built Environment, University of Wolverhampton, Wolverhampton, UK
• Pages: 214-230

When statutes collide: potential

recovery of own party

adjudication costs

Tony Hetherton and Jennifer Charlson

Department of Architecture and the Built Environment,

University of Wolverhampton, Wolverhampton, UK

Abstract

Purpose – This paper aims to examine the potential recovery of own party adjudication costs under

the Late Payment of Commercial Debts Regulations 2013. The investigation directly applies to England

and Wales, but may be relevant to other jurisdictions.

Design/methodology/approach – The interaction between The Late Payment of Commercial Debts

Regulations 2013 (derived from European Directive 2011/7/EU on combating late payment in

commercial transactions) and the Local Democracy et al. 2009 including reference to case law was

explored. A qualitative research framework was used to collect primary data through semi-structured

interviews with experienced construction industry adjudication professionals.

Findings – It was discovered that adjudicators are awarding own party costs under the Regulations,

but there was disagreement on the issues in both the literature and amongst the interviewees.

Research limitations/implications – A denitive judgment is awaited from the Technology and

Construction Court.

Originality/value – This paper will be of value to construction industry adjudication professionals.

Keywords Local democracy, Economic Development and Construction Act 2009,

Adjudication costs, Housing grants, Construction and Regeneration Act 1996,

Late Payment of Commercial Debts (Interest) Act 1998, Statutory interpretation,

The Late Payment of Commercial Debts Regulations, 2013

Paper type Research paper

1. Introduction

The aim of this research is to explore the potential interaction between two relatively

new pieces of legislation, namely, The Late Payment of Commercial Debts Regulations

(2013) (“the Regulations”), which apply to England, Wales and Northern Ireland, and the

Local Democracy, Economic, Development and Construction Act (2009) (“LDEDCA”),

which is in force in England, Wales and Scotland, specically about recovery of own

party adjudication costs in construction cases.

The LDEDCA amended the Housing Grants Construction and Regeneration Act

(1996) (“the Construction Act”), which applies to England, Wales and Scotland. This

investigation, therefore, directly applies to England and Wales, but may be relevant to

other jurisdictions.

The Regulations are an entirely separate piece of legislation derived from European

Directive 2011/7/EU (Council Directive, 2011) on combating late payment in commercial

transactions. They amend the Late Payments of Commercial Debts (Interest) Act (1998)

(“the Late Payment Act”) (Department for Business Innovation and Skills, 2013).

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/1756-1450.htm

IJLBE

7,3

214

Received 8 December 2014

Revised 1 May 2015

Accepted 26 June 2015

InternationalJournal of Law in the

BuiltEnvironment

Vol.7 No. 3, 2015

pp.214-230

©Emerald Group Publishing Limited

1756-1450

DOI 10.1108/IJLBE-12-2014-0036

To date, there has been no test case in the Technology and Construction Court (TCC)

which draws together the provisions from both the LDEDCA and the Regulations

regarding the recovery of own party adjudication costs.

The background for this research is the case law derived from the Construction Act

and the LDEDCA, with statutory interpretation being the specic area of interest. Much

will depend on the interpretation given to clause 5A(2A) of the Late Payment Act as

inserted by the Regulations:

[…] if the reasonable costs of the supplier in recovering the debt are not met by the xed sum,

the supplier shall also be entitled to a sum equivalent to the difference between the xed sum

and those costs.

According to Stephens (2013), “there is clash between the provisions of the LDEDCA

and the provisions of the Regulations”. There is a possible conict in the statutory

interpretation of Section 141 of the LDEDCA, which addresses “adjudication costs”, and

amended Section 5A(2A) of the Late Payment Act, which entitles a supplier to its

reasonable costs of recovering a debt.

Statutory interpretation is unpredictable, and there is a contention that different

tribunals may arrive at different answers based on the same facts but using different

precedents, interpretation and ratio decidendi. Legal realists such as Karl Llewellyn and

Oliver Wendell Holmes stated that gut instinct is sometimes the real decider and

rationalising and reasoning follows after the decision has been made using whatever

authorities are required (Leiter, 2002). Given the absence of any case law, this research

aims to provide a structured commentary on the potential effects on recovery of own

party adjudication costs under the Regulations.

This research therefore explores “When statutes collide: potential recovery of own

party adjudication costs under the Late Payment of Commercial Debts Regulations

2013”.

The relevant literature, cases and legislation are reported under the headings:

• statutory adjudication;

• recovery of adjudication costs;

• Late Payment of Commercial Debts Regulations 2013; and

• statutory interpretation.

A socio-legal research style investigating the law in context was implemented

(Chynoweth, 2008). A qualitative research methodology was adopted with six

construction industry professionals who might have experience of recovering

adjudication costs by the Regulations interviewed (Creswell, 2013). The practitioners

were questioned about their understanding of the interaction between the Regulations

and the LDEDCA. The responses were analysed and the conclusions reached.

2. Statutory adjudication

The major tenet of the Housing Grants Construction and Regeneration Act (1996) (“the

Construction Act”) was the right to statutory adjudication (Kennedy et al., 2010).

In the rst construction act case, Macob v. Morrison[1], Dyson J stated:

The intention of Parliament in enacting the Act was plain. It was to introduce a speedy

mechanism for settling disputes in construction contracts on a provisional interim basis, and

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When statutes

collide