Subbies get hit by legal costs loophole

The government has decided not to close a legal loophole that critics say could allow contractors to force subcontractors to pick up the costs of adjudication proceedings.

The amendments to the 2009 Construction Act were intended to outlaw contractual clauses that force one party, often the subcontractor, to pay both their own and the other side’s costs if they take a dispute to adjudication. But some lawyers and industry figures say the changes to the contractual clauses, known as Tolent clauses after a case involving Tolent Construction in 2000, will have the opposite effect. They had lobbied government to clarify the amendment but the government decided changes were not necessary.

A letter from Tony Mulcahy, assistant director of the construction sector unit at the Department for Business Innovation and Skills, said parliamentary time was unlikely to be found for more legislation banning Tolent clauses.

John Riches, arbitrator and adjudicator at Henry Cooper Consultants, said: “I think the government has got it completely wrong. They have managed to stick the industry with a problem that might take a long while to resolve.”