Tolent Contest Fails To Remove X-Factor

Background

In what may be regarded as a blow to referring parties in adjudications, the Court of Session in Scotland has ruled in the case of Profile Projects v. Elmwood (Glasgow) (April 2011) that so called "Tolent clauses" which provide for the referring party to pay both parties' costs of the adjudication, win or lose, will be upheld.

This has long been a controversial issue. The first case on it was Bridgeway Construction v. Tolent Construction in 2000, where such clauses were approved on the basis they were not contrary to the provisions of the Housing Grants, Construction and Regeneration Act 1996 (the "1996 Act").

That was followed more recently by Yuanda v. Gear Construction in 2010. In that case, the judge considered these clauses were ineffective. Tolent clauses were considered to act as such a disincentive to going to adjudication that they were contrary to the 1996 Act's provision which allows parties to refer a dispute to adjudication at any time.