I will tell you what these firms are being poked in the eye for in a minute. But if someone is trying to duck and dive with the new referee and payment regime, can you blame them?
For 25, even 30 years, the game was dead simple. The JCT, ICE, GC Works and heaven knows who else would invent standard forms of contract. Then some whizz-kid lawyer would amend the standard form until it was unrecognisable. These amendments did not benefit the builder, so the builder sat down and amended the standard subcontracts until they too were unrecognisable. It was a game. Then, teams of whizz-kid lawyers would try to get round the amendments. Since this game has gone on so long, it can come as no great shock that it is being played again with the new rules.
So steady on with the finger-wagging at these contractors. They are nervous, sensitive folk who looked at the Construction Act and wondered if it meant greater risk, greater chance of being blamed, or greater chance of losing an argument. They have been naturally defensive. All that Nick Raynsford need do is call them into the headmaster’s room for a gentle ticking-off.
So, which firms is the CLG talking about? First, it has drawn attention to Sisk Construction’s approach to calling for the referee. Its in-house form says that when the subby is dissatisfied, it can’t call its differences of opinion “disputes” until there has been a meeting of the directors of Sisk and the subcontractor, whereupon both sides will use their best endeavour to resolve the “dissatisfaction”.
What Sisk knows is that if a dispute arises, the Construction Act allows anyone to call immediately for the adjudicator. So, it tries to call what is obviously a dispute by some other name. Perhaps Sisk was worried about the act when it first came into force, but now it could do its reputation a great deal of good by knocking out that silly clause. The reason is that the subby doesn’t actually want to adjudicate – it would rather have a talk first. That’s what’s happening in the real world. Sisk can relax that clause.
Contractors are nervous, sensitive folk who looked at the Construction Act and wondered if it meant greater risk
Kyle Stewart was shopped because its subcontracts still include the idea that any money prised out of its sticky fingers by order of the referee will go to a stakeholder account and not to the subby. It may be that Kyle Stewart was over-worried about the ability of adjudication to reach a sound decision on the contract in 28 days. That can still happen. But the quality of training and panel listing has been better than expected. So maybe Kyle Stewart can relax. In any case, the stakeholder provision is certainly not what parliament intended and makes its adjudication provision non-compliant.
The CLG is also worried that Jarvis has gone off the rails. It has attempted to oust adjudication for such ordinary matters as withholding money and valuation of accounts. Perhaps it came up with the idea before seeing the final version of the act. Truth is, the idea won’t work if the subby calls for an adjudicator. Jarvis must have simply made an innocent mistake.
HBG GA Construction has been criticised because it has attempted to get around the ban on “pay-when-paid” with “pay-when-certified”.
I have a horrible feeling that this will fail, either because the adjudicator will accept an argument that pay-when-certified is still pay-when-paid, or it will decide that it is not “an adequate mechanism for payment” as required by the act.
SDC Builders of Bedford came under the spotlight because it attempted to include arrangements that postpone the effect of an adjudicator’s decision for three months. Funnily enough, though, it only applies when SDC has to pay. Headmaster’s office, boys, for six of the best.
Postscript
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EU, or e-mail him at info@tonybingham.co.uk.
