We are often asked "can I adjudicate?"; "I did not serve any notice, but do I still have to pay?"; "can I recover my costs?".
The answer to these questions is not as straightforward as you may think. Adjudication is an ever-evolving process due to innovations in technology, the complex nature of construction contracts, and the flow of new construction case law. So, our advice to you would be to consider the following:
1.Do you have a dispute? Case law has found that a dispute does not need to be given a complicated definition, a normal dictionary can be used to define it.
2. Has your dispute 'crystallised'? i.e., can it be said that both parties know about the dispute? Case law has held that even if the other party to the dispute ignores the claim, it can still be said that the dispute is known to both parties.
3. Has the dispute arisen under the contract? A classic example is, has the Contractor been paid by the Employer as per the agreement.
If you can answer 'yes' to these 3 questions, and you have been carrying out construction work then you will be able to adjudicate.
However, it is not unusual for us to review contracts which do not refer to adjudication or provide any sort of procedure to follow. If this describes your contract, then you will need to follow the adjudication procedure set out in The Scheme.
Whatever the rules are that apply, you will need to serve a notice of adjudication on the other party to the dispute. This must briefly describe the dispute. There are other requirements that this notice must follow, or you risk not serving a valid notice. We can explain those to you.
An adjudicator must then be appointed. If you don't follow the requirements of your contract when appointing the adjudicator, then the adjudicator's decision may be unenforceable.
A referral notice will need to be served after this. This must also be carefully drafted to ensure you have covered all the legal arguments and factual points you need to make. The referral notice can make or break an adjudication.
It should be noted that any expenses you incur are not recoverable from the other party. So, bear in mind, you could be in a situation where you have incurred costs, but have not convinced the adjudicator and so have lost. You will be responsible for your costs and the adjudicator's.
So here are some common questions and answers:
- What is a pay less notice?
A: A pay less notice is used by the Employer to tell the Contractor that they are 'paying less' than the amount which they stipulated was owed to the Contractor in the Payment Notice.
- If I don't have a pay less notice, can I still not pay?
A: Not immediately, you will have to pay the amount which was deemed to have been owed in the payment notice and then you can bring an adjudication to value how much the work was worth.
- The pay less notice had to be served 2 days before the final date for payment. Does it matter if I serve it 1 day before?
A: Yes, you must follow the payment provisions in the contract and the timings in them.
- Is it enough to just say "I am not paying you!"?
A: Unlikely. Case law has found that pay less notices do not need to be formal notices as long as it is clear that a pay less notice was intended to have been given. However, the pay less notice must be shown to have been aimed at a specific payment application. The pay less must also give a basis for why they are paying less. These notices need to be clear and unambiguous. An oral statement which can be deemed to be ambiguous is unlikely to be sufficient.
- The contract says I must use the RIBA to appoint the adjudicator and we used the RICS – does that matter?
A: Yes, if the adjudicator was not appointed by the adjudicator appointing body named in the contract, then the adjudicator's decision will be unenforceable.
- The other side served a pay less notice and didn't pay me, so I walked off site. They say I am in breach. Am I?
A: Yes. Non-payment is not a reason to suspend work/performance. You must give at least 7 days' notice to the other party that you are suspending performance and why you are suspending performance. If a valid pay less notice was given, then you will not be able to suspend.
- My contract does not even mention adjudication. Can I adjudicate?
A: Yes, as long as it can be shown you have a 'construction contract'. You must consider section 104 and 105 of the Housing Grants, Construction and Regeneration Act 1996 to determine if you have a 'construction contract'.
- I supplied lots of materials to site and haven't been paid. Can I adjudicate?
A: No, Section 105(2)(d) says delivery of materials to site are not 'construction operations.
- I don't like the adjudicator who has been appointed. Can I do anything?
A: If you have a legitimate reason, such as there is likely to be a conflict of interest or you have worries about the impartiality of the adjudicator, then you can object to the adjudicator with the adjudicator nominating body or challenge the decision in subsequent legal proceedings. If you are the referring party then you could stop the adjudication and start again, but that is a high-risk strategy.
- An adjudicator gave a decision in our favour, but the other side have not paid. What do I do?
A: Your best option will be to issue adjudication enforcement proceedings with the Technology and Construction Court.
The best answer we can give to any of your questions is you should instruct a firm with expertise in adjudication. Barton Legal are a team who have many years of experience of bringing and defending adjudications. Our team is led by Bill Barton who has masses of experience.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.