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Construction Adjudication

The Problem

Disputes about construction works are all too common. It might be a dispute between the owner/developer and the main contractor, between the main contractor and a sub-contractor, or it might involve the professionals such as the architect and structural engineer. It might be about defective workmanship or design, a disagreement about the value of work done, or about payment for variations to the works and/or extensions of time.

Resolving these disputes through the traditional machinery of the courts or arbitration is always expensive and it can take months, sometimes years, to get a decision. By which time one of the parties might have stopped trading and become insolvent – possibly as a result of being starved of cash flow due to the ongoing dispute.

The Solution

Mediation is one solution, and a great one where the parties are willing to compromise. But where the only realistic solution is a decision from a neutral third party, then Adjudication is the answer.

What is Adjudication?

Construction Adjudication is a quick and inexpensive way of resolving a dispute arising out of construction works. A neutral third party (the Adjudicator) decides the issues between the parties. It will almost certainly be much quicker and much less expensive than arbitration or litigation in the courts. Key features of the procedure are:

  • It is exceedingly quick. The Adjudicator must deliver his decision within 28 days of his appointment (although the parties can agree to extend this period).
  • It is private, unlike court proceedings.
  • Statutory adjudication was introduced by the Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009) (the Construction Act).
  • It applies to all “construction contracts” as defined in the Construction Act. Most building and engineering contracts will be covered.
  • Adjudication is compulsory, in the sense that any party to a construction contract has the right to resort to adjudication at any time. There is no contracting out of the Construction Act.
  • If the Construction Act does not apply to a particular dispute, the parties can agree that it is to apply. So even if there is no right of adjudication for your dispute, you can agree with your opponent that its should be adjudicated.
  • Adjudicators’ decisions are binding until the dispute is finally determined by legal proceedings, arbitration or by agreement. However successfully challenging an Adjudicator’s decision in the courts or arbitration is rare. Most parties live with the decision and move on.
  • Adjudicators’ decisions are enforced (eg if the party ordered to pay a sum of money fails to do so) by an application for summary judgment in the Technology and Construction Court. Such applications are almost always successful.
  • Usually each side will bear their own costs (there are exceptions to this), but if lawyers are not involved then the costs will be modest.
  • Usually the losing party will pay the Adjudicator’s fees.

 

My Approach

Originally the intention of the Construction Act was that Adjudication would be fairly informal. However, it developed into a formal process with lawyers on both sides and parties serving detailed submissions, witness statements and often even expert reports.

In other words, the procedure has become over-lawyered. I am very keen to promote a return to the original statutory intent of the Adjudication procedure:

FOR THE VAST MAJORITY OF CONSTRUCTION DISPUTES YOU DO NOT NEED TO PAY FOR A LAWYER TO REPRESENT YOU IN AN ADJUDICATION – YOU CAN DO IT ALL YOURSELF. YOU JUST NEED A LITTLE CONFIDENCE AND SOME GUIDANCE TO HELP YOU.

Of course, for complex disputes or where you otherwise prefer to receive legal support, you are free to instruct a solicitor to help you with the Adjudication, and it is still likely to be significantly cheaper than going to court.

I have very wide experience of construction disputes. As a private practice solicitor I have focused exclusively on construction claims for the last 16 years. That has included numerous adjudications, from relatively modest claims right up to £100 million infrastructure disputes. I am accredited as an Adjudicator by the Chartered Institute of Arbitrators. In my practice I focus on disputes up to about £50,000 in value, because these claims quickly become uneconomic to pursue through the courts.

As an Adjudicator I provide clear directions to the parties about what I require in order to enable me to reach my decision. I will take the initiative in asking for information from each side. In most cases I can decide the dispute on the basis of the paperwork submitted to me. However sometimes I will suggest, or the parties may agree, that a meeting will be helpful. The procedure I suggest very much depends on the facts of each case.

I adjudicate any type of dispute arising from a construction contract, although where necessary I will seek (at my own cost) a view from my associate specialists (for example in quantity surveying, architecture and contract administration) where specialist knowledge would be helpful.

I deliver my decision on the dispute without detailed reasons for my decision or (at additional cost) with reasons. My decision will be of high quality based upon the evidence submitted to me and the current law.

The Cost

For claims valued at up to £50,000 I charge a fee equating to 10% of the claiming party’s valuation of the claim, but subject to a minimum fee of £1000. For claims over £50,000 I charge on an hourly basis, currently £125 per hour. In addition I charge expenses (such as travel) at cost, and VAT.

For example, where a claiming party values his claim at £20,000, my fee will be £2,000 plus expenses (if any) and VAT. This fee will usually be payable by the losing party, although I retain discretion as to what order I make regarding payment of me fee. So where it is difficult to argue that there has been an outright winner, I may order that each side pays 50% of my fee.

The Next Step

If you are involved in a construction dispute and would like to talk to me about my appointment as Adjudicator, contact me now.

Further Guidance
There is a lot of helpful information on the internet but here is a good place to start:
http://www.adjudication.org/resources/guidance-notes

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