The Late Payment Act says that, once statutory interest begins to run in relation to a qualifying debt, the creditor is entitled (in addition to the interest) to £100, for a debt of £10,000 or more, plus its reasonable costs in excess of that £100. This is through the mechanism of an implied term in the contract. An adjudicator awarded a party £14,093.20 under the Act for its costs but could he do that?
No, said the court. Under s108A of the Construction Act, costs incurred by the parties in adjudication are only recoverable if an agreement to that effect is made in writing after the notice of adjudication (unless it is a contractual provision relating to the adjudicator’s fees and expenses). The Late Payment Act implied term was caught by s108A and was therefore ineffective unless the subject of an agreement made in writing after the notice of adjudication. No such agreement had been made and the adjudicator consequently had no power to make the reasonable costs award.
Enviroflow Management Limited v Redhill Works (Nottingham) Limited: unreported.