Barry Ashmore explains the meaning of adjudication and how it can be used to help you get paid.

The statutory background
Where the Construction Act applies, there’s now a statutory right to refer any dispute or difference arising under the contract to adjudication. All ‘construction contracts’ as defined in the act, must contain an adjudication procedure.

If the contract agreement fails to comply with any of the act’s basic requirements, then the entire provisions of the ‘Scheme for Construction Contracts’ shall apply. And you also need to bear in mind that the contract may contain express provisions which provide for adjudication, even if the act doesn’t apply.

What is adjudication?
Adjudication is a legal procedure by which any party has the right to have a dispute decided by an adjudicator. It’s intended to be a quick process and it can be cost effective when handled properly.
Please don’t assume you automatically have a dispute that can be adjudicated. For a dispute to be adjudicated, that dispute has to have ‘crystallised’.

In other words, adjudication cannot be used to replace the normal contractual processes. So, if you haven’t followed the procedures set out in the contract or have been asked for information which you haven’t provided, you’ll not be able to adjudicate, unless the other party agrees.

If you commence adjudication or any other form of formal dispute procedure set out in the subcontract, such as litigation or arbitration you can never be certain of the outcome, no matter how strong a case you have. Look at it this way: when two professional and unbeaten boxers get into the ring both know they’re going to win, but as we know, that’s impossible.

Can I do it myself?
Construction Act adjudication was originally intended to be a simple process by which disputes could be resolved. To a certain extent adjudication is a simple process, but it’s nonetheless a legal process and not one to be undertaken lightly.

The contract may contain provisions and rules for adjudication and you need to be very careful that you understand the rules. If you have no experience of legal process, then it’s best to take professional advice. Bear in mind that the whole adjudication process takes place very quickly, so you need to act fast if you’re on the receiving end of an adjudication notice.

Starting the process – The adjudication notice
The process is started by way of written notice (the adjudication notice) to the other party. The adjudication notice is a very important document in that it defines what matters the adjudicator has the jurisdiction to decide.

The adjudication notice must be served on the other party before you approach an adjudicator nominating body to appoint an adjudicator. There are various ANBs and most, but not all, will normally require a fee for them to appoint an adjudicator.

The referral notice
While the adjudication notice might be a couple of A4 pages the referral notice contains all the evidence you wish to rely on and therefore it can often run to several lever arch files.

The referral notice must be issued to the adjudicator within seven days of the issue of the adjudication notice. There’s usually a fair amount of work in the preparation of the referral notice even in the simplest of disputes. It’s for this reason that, in most cases, the referral notice is prepared before the adjudication notice is served.

The 28-day period for the adjudicator to make their decision starts on the date the adjudicator receives the referral notice.

Who pays for adjudication?
Although adjudication is generally inexpensive in comparison with arbitration or litigation, the process is not free and there are inevitably some costs that must be paid. There are two elements to these costs: the fees of the adjudicator (together with those for any advice and assistance obtained by them) and the costs you and the other party, as participants in the process, spend on your own legal, expert, or commercial advice.

Under the scheme the adjudicator doesn’t have this power, and many, but not all, specially written procedures specifically provide that each party pays its own costs.

Who pays the adjudicator’s costs?
The act requires that the adjudicator is entitled to decide who should pay the adjudicator’s costs, as part of the decision, unless the parties have agreed otherwise after the notice of adjudication has been given.

Usually, the adjudicator will decide that the party ‘losing’ overall must pay their costs. However, this isn’t always the case, and the adjudicator may take into account matters such as how each party has behaved, and whether each party has won on some issues. On the other hand, whatever the outcome of the decision, the adjudicator may simply apportion the fees equally between you and the other party.

This isn’t the end of the matter since both parties are jointly and severally responsible to the adjudicator for their fees. This means if one of you defaults on payment, or becomes insolvent, the adjudicator can legally demand those fees from the other.

How does the process end?
It sometimes happens that the other party will seek to negotiate a settlement once the notice of adjudication has been issued. You should be alive to this possibility but should not expect it to happen. Nor should you become distracted from the adjudication process itself. It’s often the case that the notice of adjudication brings about a hardening of attitude from the other party who’ll then fight tooth and nail to defend their position.

If the process runs all the way through it will result in the adjudicator’s decision. This will be published to the parties, and it will set out the decision in respect of the matters referred to the adjudicator. It will also set out the date by which any monies to be paid by one party to the other must be paid, and it will set out his/her fees and the proportion to be paid by each party.

Is the adjudicator’s decision legally enforceable?
If you win and the losing party refuses to pay, then it’s a matter for you to enforce the decision in the courts and this is a job for a solicitor with specialist construction expertise, as it should be a relatively quick process.

The adjudicator’s decision is binding on the parties until the dispute is finally decided by arbitration, litigation, or agreement. Because it is binding the courts will enforce the decision in summary proceedings in the Technology & Construction Court (TCC).

How does it help me to get paid?
The proper preparation and presentation of your written case with supporting evidence to the adjudicator will invariably be a major factor in determining the success or failure of your arguments.
By stepping back and taking an objective view and/or preparing for an adjudication can often help you to get clarity on your position.

You should always take professional advice before setting off on the path to adjudication. It’s very easy to get it wrong and getting it wrong can have serious financial consequences. A great many disputes can be resolved by dialogue and negotiation and some tough talking or appointing a professional to do that for you can often bring results.

The Construction Act was passed in 1996 and became law in 1998 and I’ve been advising clients about it and acting on their behalf in adjudications ever since. Our consultants have been involved in literally thousands of adjudications, so if we can help, please don’t hesitate to get in touch.
01773 712116
info@streetwisesubbie.com
www.streetwisesubbie.com
Barry Ashmore is managing director
and co-founder of StreetwiseSubbie.com