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Construction Dispute Resolution

Construction Adjudication

If you are in a construction dispute requiring resolution, you should consider taking advantage of the adjudication procedure set out in the Housing, Grants, Construction and Regeneration Act 1996 and the Statutory Scheme for Construction Contracts Regulations 1998.

Construction Adjudication - Our Expertise

We Are the Experts in Adjudication

We are experts at preparing construction claims, including preparing delay analyses and loss and expense or damages claims. Our aim is to always ensure that the most effective construction claim strategy is adopted, so that hopefully construction claim negotiations are successful and the issue resolved amicably with the relationship intact.

Sometimes, due to external factors this is not always possible and resolution by a third party is required .

In construction, the quickest and most cost effective dispute resolution method is by construction adjudication. It is a relatively fast, cost effective and straight forward process. At Kenzie we are experts at representing clients within adjudication, drawing on our vast experience of construction claims to ensure that the adjudication process is successfully concluded in favour of our clients.

We Truly Understand Construction Disputes

In our experience, if you manage the facts of the dispute in a clear and logical manner, that is readily understood by the adjudicator, then you are giving yourself the best chance possible of achieving a successful result. To obtain this you need to instruct experts who have vast experience of projects, construction claims and adjudication and can formulate and present your position in a clear manner.

Most construction adjudications are about time (extensions of time) or money (prolongation, disruption costs or the value of variations) or a lot of the time both. Key to these disputes are the delay and quantum analyses that are a fundamental part of the construction claim and may become the subject of an adjudication.

We believe it’s a distinct advantage for our clients, to be able instruct a single party who can manage the issue from the very beginning to final resolution. We can prepare (or defend) the construction claim, including the contractual basis, the delay and quantum analyses, as well as instigate, manage and prepare all necessary documents required within the adjudication. This avoids any potential duplication of effort and ensures that within adjudication the relative strengths and weakness’s of the claim are fully understood.

Or alternatively, during adjudication we can work alongside either your internal or external legal team to ensure that the most robust position is put forward on your behalf.

 

Our Experience and Expertise Counts

The adjudication procedure itself is relatively straightforward, clearly the most important factor is that within the requisite documentation put forward your position is clearly structured, readily understood and appropriately evidenced.

At Kenzie we have extensive experience of representing clients within adjudication, either as the claimant or the defendant. Given the fact that adjudication is binding on the parties subject to final determination, it is of the utmost importance that you put forward the most robust, comprehensive and detailed position possible. In our view, it’s best to “tier” or “stack” up your arguments so as to give yourself the best chance of a successful result.

We consider this comes from years of experience of managing numerous construction claims, disputes and adjudications. It’s only by seeing an issue through from the beginning to the end, that you truly understand the arguments that are likely to have the best chance of success. This is the foundation of our success… commitment, pragmatism and experience.

At Kenzie we will ensure:

 

A Guide to Construction Adjudication

Adjudication is a dispute resolution mechanism. It is regularly used in the construction industry, and it is relied upon heavily. The adjudication procedure was developed so that disputes could be resolved without going to court – an expensive and lengthy process. Construction adjudication is sometimes called a “pay first, argue later” mechanism, since it is designed to protect cash-flow during the building or renovation process, though it has become much more than this. We’re going to provide a thorough guide to construction adjudication from the types of disputes that lead to adjudication to what to do if you receive an adjudication notice.


  • What Is Construction Adjudication?

    The Construction Act of 1996 introduced statutory adjudication. It applies to all parties in a
    “construction contract”. Any party in the construction contract can refer a dispute to adjudication at any time. The procedure takes 28 days, though parties can agree to a longer time-frame; the process can be extended by a further 14 days if the referring party or both parties agree. The 1998 Scheme for Construction Contracts provided a fall-back position for those whose
    construction contracts did not include all adjudication provisions in the 1996 act. In these cases, adjudication under the 1996 legislation becomes an implied term of the contract. None of this changed in the amendments to the law in 2011. The updates of the Construction Act of 2011
    invalidate contractual provisions that attempt to allocate costs of adjudication between the two
    parties. Each party is jointly liable to pay the adjudicator for their work and expenses they incur.
    You cannot contract out of construction adjudication. If the construction contract lacks an
    adjudication provision, the 1998 law guarantees you will end up in adjudication.


  • When Is Adjudication Appropriate?

    Adjudication is designed for resolving claims involving interim payments, hence the name. The system encourages people to pay the contractor now, and then argue about what you owe for a progress payment or whether or not you owe the next instalment. Adjudication is regularly used for working out the final accounting for the project, especially if someone says there are defects in the work done. Someone who thinks the work is shoddy or defective can use adjudication to argue they don’t owe the final instalment. However, disputes are no longer limited to claims for money.
    Adjudication is appropriate for delays and disruptions in work. If the contractor has taken a break to work on another project or asked for another month to finish the project, construction adjudication is appropriate.
    The construction adjudication process was not originally intended for complex claims like professional negligence, breach of contract and termination of contract, but these claims do end up in adjudication periodically. The adjudication process was also intended for small scale disputes, but it is now being used for multi-million-pound disputes.


  • What Effect Does an Adjudicator’s Decision Have?

    Adjudicator’s decisions are interim-binding. This is a fancy way of saying that they are binding until the dispute is resolved by mutual agreement, arbitration or legal proceedings. Their decisions are typically enforced by the Technology and Construction Court. Challenges to their decisions are rarely successful, though they may be overturned if new evidence comes to light. You are legally bound to comply with the adjudicator’s decision though you intend to pursue a court case. You cannot appeal the decision to a second adjudicator, and you cannot refer the same issue to another adjudicator later. If you’re unhappy with someone’s repairs or shoddy work, that is considered a separate claim.
    The single dispute could involve complex issues like losses due to project completion delays, the value of variations of work from the original plan, and the repairs that someone says need to be made to correct for defects. The adjudicator’s final ruling will combine all of this into a single lump sum that the responsible party will need to pay, or order work to be done to remedy the situation. The adjudicator cannot deal with interest on the sums awarded unless the contract already contained a provision dealing with interest or if the two parties agree on interest being paid.


  • What Is the Adjudication Process?

    The adjudication process was supposed to be informal, but it has become a formal process. The process includes parties providing detailed submissions. Witness statements are common. Expert reports are regularly submitted to the adjudicator.
    Simply having a dispute with your contractor doesn’t mean it is in arbitration. The mere notification of the other person that you have a dispute doesn’t guarantee that you will end up in arbitration. For example, if the claim is so ill-defined that the other person cannot respond to it, it will probably be dismissed.
    The entire process starts when a party refers the dispute to adjudication by giving a written notice of their intention to do so. There isn’t a specific form used. This notice must contain a description of the dispute and names of who is involved. It outlines when and where the dispute arose, though this may be as simple as “they’re demanding payment for cabinetry I think looks awful”. The notice must include the nature of remedy being sought, whether it is a refund, resumption of work or corrective work to be done. The names and addresses of all parties must be included in the notice so that documents can be served to the others involved in the case.
    Upon receipt of the notice of adjudication, an adjudicator is appointed. This must be done within seven days of service of the notice. The adjudicator could be someone both parties agree upon to act as adjudicator, though it cannot be an employee of a party to the dispute. If they cannot agree, then they can send an application to the Adjudicator Nominating Body and paying a fee. The ANB will select an adjudicator in these cases. The selected adjudicator has two days to determine whether or not they’re willing to act. In the rare cases when the ANB cannot do this within five days of the request, the whole process has to start again. One party can object to the selection of a particular adjudicator, though this won’t invalidate their appointment or their decision.
    The next step is a referral notice. That must be served within seven days of service of the adjudication notice. The referral notice details the case of the party who referred the dispute to adjudication. It should also come with documentation to support the claim such as expert reports and witness statements. The referring party should be able to serve this notice and have enough time to respond to the complainant’s case. This is because the response to the referral notice is the referring party’s only opportunity to make submissions to the adjudicator.
    The Construction Act sets a 28-day time frame for adjudicating the case. Sometimes the responding party is only able to respond to the case after they’ve been told that there is a dispute that’s gone to adjudication. Any responses must be sent within that 28-day period; if you’ve received such a notice, you cannot afford to wait to respond since any decision by the adjudicator is binding until reviewed by an arbiter or litigated in court, and that only occurs if you challenge the decision. That time frame is designed to deliver quick and cost-effective results.
    The responding party can defend themselves against the claim. The responding party’s defence must refer to the referring party’s claims. The Construction Act doesn’t require that they issue a response, though if you’ve received notice of a dispute, it is wise to do so. After all, you’re bound by the results of the issued decision though you remained silent.


  • What Should You Do Before You Start Adjudication?

    Before you start adjudication, review your construction contract. Construction adjudication is only available for those in construction contracts. Note that a construction contract could be in writing, partly oral or entirely oral. If you have verbal promises and a written contract, the written contract typically wins out.
    Your claim should be crystallised. You should have a clear definition of what is wrong and what you want done. Be specific in each case. That you’re unhappy with the look of the new kitchen is insufficient. That the cabinetry corners don’t meet up and they put in cheaper, inferior tiles is a basis for a claim. Whether you want the work to be done per the original contract or refunds for the inferior work and materials is something you need to outline in your claim.
    The dispute in your notice has to be the dispute that has crystallised. You cannot go to adjudication for shoddy materials and workmanship when the original complaint was failure to complete work on schedule. You can’t use your adjudication session to hash out problems with the plumber who redid the bathroom when the original complaint was against the person who poured an uneven foundation. You shouldn’t identify someone in the dispute who was unaware of the issue or had no time to consider the matter.
    The court will not enforce an adjudicator’s decision based on a notice issued before the dispute was crystallised. The other side doesn’t have to dispute it or admit wrongdoing, but they must know what claim is being made against them, understand the basis of the claim against them, and it must be clear and easily understood. For example, you need to clearly state why you think the party you’re entering adjudication with is responsible for the claim.
    You cannot extend the scope of the claim, adding on new complaints, repairs or concerns after you’ve filed the claim. This makes compiling a detailed list of projects with the work done to date essential. However, you could refine the arguments or abandon previous points, such as deciding to drop demands for someone to replace the credenza they damaged. Note that the other side can contest every fact you put forward in your claim and challenge arguments you make. You can ask for either correction of the issue or compensation to pay someone else to repair the issue, but you can’t ask for money in the initial claim and then demand corrective work be done by the contractor at a later point in the process. Be certain of how you want the issue remedied before you file your claim.
    In many cases, there can only be one dispute at a time against a party. Your dispute could include multiple issues such as uneven flooring, work that doesn’t meet building codes, or inferior materials. You could file several disputes, each against a different party, though expert legal advice is recommended in these cases.
    One adjudicator can decide on more than one dispute arising from one contract if both parties consent to this. The adjudicator can solve issues that arose from different contracts. The adjudicator can open up, revise and review certificates unless the original contract states that these certificates are final and conclusive.


  • What Should I Consider After the Adjudicator Issues a Decision?

    After the adjudicator issues a decision, you can consider whether or not it was completed on time and communicated in a timely manner. You can challenge their decision if they had conflicts of interest, acted unfairly or with bias, or made mistakes. Clerical errors aren’t something you can challenge a normal decision on. A decision can be challenged if someone exceeded their jurisdiction. Sometimes the adjudicator is wrong, but you have to prove this if challenging their decision. Unfortunately, it has been made obvious that the courts will enforce an adjudicator’s decision even if it is obviously wrong. This is where getting accurate information together to give to the adjudicator is essential.


  • What Is the Adjudicator Paid?

    Adjudication is designed for resolving claims involving interim payments, hence the name. The system encourages people to pay the contractor now, and then argue about what you owe for a progress payment or whether or not you owe the next instalment. Adjudication is regularly used for working out the final accounting for the project, especially if someone says there are defects in the work done. Someone who thinks the work is shoddy or defective can use adjudication to argue they don’t owe the final instalment. However, disputes are no longer limited to claims for money.
    Adjudication is appropriate for delays and disruptions in work. If the contractor has taken a break to work on another project or asked for another month to finish the project, construction adjudication is appropriate.
    The construction adjudication process was not originally intended for complex claims like professional negligence, breach of contract and termination of contract, but these claims do end up in adjudication periodically. The adjudication process was also intended for small scale disputes, but it is now being used for multi-million-pound disputes.


  • What Are the Benefits of Adjudication?

    One of the benefits of adjudication is speed. A resolution within 28 days is far faster than a court decision. Another benefit of adjudication is that both parties have to bear their own costs. The referring party won’t run the risk of paying for the other side’s costs if the claim is unsuccessful. If they want two expert opinions to challenge the claim, they have to pay for it. This helps reduce the cost of adjudication relative to litigation and arbitration. This makes adjudication available to subcontractors and smaller companies that can’t afford to go to court.
    A benefit of adjudication is that you can select your experts and ask them to act as an investigator. It is wise to have expert witnesses or opinions lined up before you file your notice of adjudication. You can choose an adjudication process of your liking if the other side agrees. Furthermore, it allows you to follow a dispute resolution process already spelled out in your contract.
    The referring party is mostly in control, since they have weeks or months to prepare their case. The receiving party, on the other hand, has only days to weeks to respond. You certainly don’t have to wait months for a court date to open up to receive a judgement in your favour.
    There are rarely oral arguments, and you can often do everything through written submissions.


  • What Are the Disadvantages of Construction Adjudication?

    The speed of the adjudication process is a disadvantage, since you have relatively little time to respond and defend your case. This is why planning your claims and lining up evidence in advance of filing your notice requesting adjudication is wise. This detailed information collection is essential since parties don’t always meet with the adjudicator, and it is rare that witnesses are cross-examined.
    Any expert witness you select cannot go beyond the jurisdiction of the contract. The expert determination cannot be made if it is not supported by statute.
    Your adjudicator doesn’t have to act judicially when applying the law. For example, there is no testing of the evidence. There is no formal evidence, either. The adjudicator can come to the wrong answer, and it is still legally binding. For example, the adjudicator is not liable for omissions such as forgetting to include certain costs in their final decision unless it is in bad faith. Your only solution is to then go to court.
    The process is so fast that it can be difficult for the party notified of the dispute to mount a good defence. Time management in these cases is critical to success. It also makes drafting good contracts to minimise disputes and outline a dispute resolution process that each side can agree to incredibly important.
    Adjudication in construction contracts was designed to be a quick, informal process. It has grown into a complex, formal process that, while still fast, is legally binding and used for expensive, multi-pound claims. It provides flexibility for many, but it can lead to legally enforced mandates though the adjudicator is wrong. Adjudication of construction contracts has become a way to resolve matters quickly, knowing that it may still end up in court or arbitration later.

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