The adjudication generation

Adjudication came of age in 1999, following the case of Macob Civil Engineering vs. Morrison Construction, which came before the courts for enforcement. They were asked to set aside the adjudicator’s decision because a technical error had been made during the process. His Honour, Judge Dyson, declined to do so, stating: “The intention of Parliament in enacting the Construction Act was plain. It was to introduce a speedy mechanism for settling disputes in construction contracts on a provisional interim basis, and requires the decisions of adjudicators to be enforced pending the final determination of disputes.”

The Housing Grants Construction and Regeneration Act 1996, sections 104 to 117 legislated on two matters: payment and dispute management. For the provisions of the act to apply, the ruling in RJT Consulting Engineers (2002) required that the terms of the agreement must be written down – termed “evidenced in writing”. The decision in Westdawn Refurbishments (2006) ruled further on this. The terms in writing must be of material substance. In other words, if the terms are significant they must be in writing. Consequently observers, not unreasonably, have stated that contracts should be executed on a standard form. Furthermore, for an adjudicator’s decision to be enforced under the Act, the contract must be for one of the prescribed operations. This means supply-only contracts, contracts with residential occupiers and contracts for the fixing of plant in process industries are excluded.

Other cases have also affected what we may expect. Decisions are enforceable despite error (Bouygues UK, 2000). All costs are to be borne by the referring party, if they so contract (Tolent Construction, 2000) and adjudicators may extend the time for service of the referral notice without acting outside their jurisdiction (William Verry 2004).

Only disputes “under the contract” may be taken to adjudication, though these may be taken “at any time”. To pursue a claim for additional payment successfully, you must be certain that you have entitlement under the contract. A thorough review of your contract is needed. Do not leave this to the claims consultant as it can take considerable time and expense and is an activity within the capability of most managers.

Having clarified your entitlement, you then need to comply with the contract’s conditions. Pay attention to the time frames and any ‘condition precedent’ notice provisions. It is amazing the number of times adjudications fail for want of correct time keeping.

Determine a timetable for the communication and resolution, but make one final attempt at a deal before serving the Notice of Adjudication. This notice contains only a brief description of the matters on which the adjudicator will be asked to rule. It is important to ensure that all matters of dispute are highlighted, that those matters have already been given a good airing and that the nature of the redress being sought is spelt out clearly. Within seven days, a Referral Notice will need to be served, containing all the items on which you are asking the adjudicator to make an award.

Much has been written on the tactics of ambush employed by sharp practitioners but, with the clock ticking, it is wise to compile the Referral Notice before penning the Notice of Adjudication. While this second notice must be specific, it is also wise to allow the adjudicator a degree of latitude to make decisions as he sees fit.

Costs where the adjudication procedure is silent may be recoverable, and the adjudicator can decide on how his fee is to be apportioned. The parties are jointly and severally liable for the amount.

The process can take one of several forms. Adjudicators can use their own initiative to ascertain the facts, but with only 28 days (up to 42 with consent) to decide, they are unlikely to look any further than the documents placed before them.

Sometimes a party resists the adjudicator’s decision, in which case the successful party applies for a peremptory order. Judges are keen to see compliance with adjudicators’ decisions and may award costs if any appeal is viewed as a delaying tactic.

The industry has accepted that swift and sometimes rough justice is the way forward. If, following the government’s review of the Construction Act, consensual issues are adopted, adjudication will be with us for some time to come.