Adjudication under the Construction Contracts Act (“CCA”) is designed to be an expedient means of resolving construction disputes. The Courts will rarely review an adjudicator’s decision.
Nature and process of adjudication
Any party to a construction dispute may refer a dispute to adjudication whether or not their contract provides for this.
The principal advantage of adjudication is that disputes are decided within a relatively short timeframe. The process is also usually more cost effective than other dispute resolution options. Both of these features mean that disputes arising during the construction process can often be resolved by adjudication in a manner that facilitates the timely completion of the works and may better preserve relationships.
An adjudicator has powers to resolve a dispute about whether a party is liable to make a payment to the other or may resolve any other question that is in dispute about the rights and obligations of the parties under a construction contract.
The adjudication process commences by one party serving a Notice of Adjudication on the other. From that point the timeframes are:
- The parties either agree on an adjudicator or a nominating body appoints an adjudicator – up to 5 working days;
- An Adjudicator must accept an appointment within 2 working days;
- The Claimant must serve a claim within 5 working days;
- The Respondent must file a response with 5 working days (although an extension may be possible);
- The Claimant must file a reply within 5 working days;
- If an Adjudicator allows it, the Respondent may file a rejoinder in respect of any new material or issues raised in a Claimant’s reply and must do so within 2 working days.
- The Adjudicator makes a determination within 20 working days – with the ability to extend this timeframe to 30 working days.
Adjudicators have wide powers in regard to the conduct of an adjudication proceeding. Typically adjudications are determined on the papers. An adjudicator’s decision will be final and binding unless, and until, the dispute is resolved in another manner (such as by subsequent court proceedings or agreement). For example a contractor may obtain a decision from an adjudicator that a payment claim is payable as a result of an unanswered payment claim, but the principal or owner may still dispute that they owed that amount. As adjudicators are usually experienced in the construction industry in many instances, however, their decisions will serve as final decisions. There is no right to appeal an adjudicator’s decision.
A Court may intervene in the face of clear procedural errors. They have repeatedly emphasised that their intervention will only occur rarely. In a recent example, however, Chappell v Swindells & Anor, Justice Powell found that an adjudicator’s decision was manifestly flawed and had to be set aside. The fact the adjudicator had communicated directly with the contractor about what was invoiced and paid, without any reference back to the applicants, was a substantial breach of natural justice. The applicants had also had no opportunity to comment on a spreadsheet provided by the contractor until the day before the adjudicator made his decision. Furthermore, the adjudicator had “fundamentally” failed in his role by failing to consider a number of issues raised by the applicants to justify their non-payment of the sums claimed by the contractor. The adjudicator had rather baldly asserted that if reasons were not covered by his determination then they were satisfactorily covered in the reply to the response and the response to the counterclaim. Justice Powell pointed out that was simply the contractor’s submissions and not evidence. The applicants were entitled to receive reasons for the adjudicator’s rejection of their counterclaim/setoff issues. Furthermore, the adjudicator failed to undertake an analysis of whether any of the issues raised by the applicants provided a whole or partial defence to the amounts claimed.
Chappell v Swindells & Anor is a rare example where the adjudicator had clearly departed from the principles of natural justice. A large number of disputes are resolved by adjudication and have the effect of being final and binding. For this reason it is important to ensure that the papers put before an adjudicator are well prepared.
Harkness Henry deals with a range of construction issues from reviewing building contracts to assisting clients with strategies for resolution when things go wrong.
Published: 01 March 2019