Dispute Resolution – Adjudication – The Potential Pitfalls and Solutions

At the end of a construction contract there are often many differences of opinions to be resolved, some may have been argued over for a considerable period of time, both parties knowing the other’s opinion but are not convinced and no quarter has been conceded.

The disputes are typically about the value of the works that have been completed, including the variations but can also include delays and extensions of time, contra charges quality issues and loss and expense.

During the works each party seeks to ‘park’ the disputes in the best interest of relationships and progress with the consequence that after works have been completed there can be substantial issues to be resolved and positions have become entrenched.

For many years now the method for resolving disputes quickly and cost effectively has been adjudication.

In 1998 the then Government introduced the Housing Grants Construction and Regeneration Act 1996 and then to make it more effective it was amended in 2011 by the Local Democracy, Economic Development and Construction Act 2009 [collectively ‘the Construction Act’].

The Construction Act provides for construction disputes to be resolved by adjudications which are very often completed in 28 days from commencement. Used wisely the Construction Act can be a significant tool for resolving disputes because the Adjudicator issues a decision and that decision, subject to jurisdictional matters, is enforceable in court.

Recent Case Studies

1. Case Study – Non-payment

  • In a recent case a sub-contractor undertook a £200,000 package of work for a main contractor. For reasons that suited both the contractor and the sub-contractor the parties agreed 75% through the works to bring their agreement to an end and for the contractor to complete the works using others who were on the site at the time.
  • At the time of the agreement to separate the sub-contractor had been paid nothing but had applied for and expected to be paid £145,000.
  • Within days of the agreement the contractor wrote to the sub-contractor saying that there was no such agreement and it issued a document alleging that it would cost it £160,000 to complete the last £50,000 of work and that consequently the sub-contractor was due nothing and that the £145,000 would never be paid.
  • Faced with such conduct negotiation is unlikely to be the answer, in this case the sub-contractor took the contractor to adjudication. The Adjudicator decided that he ‘preferred’ the evidence of the sub-contractor and agreed that there was an agreement. The Adjudicator also decided that the contractor should pay the £145,000 plus interest and all of the Adjudicator’s fees and expenses.

2. Case Study – Contra Charges

  • A client was charged £1.2m in contra charges for an array of claim headings including delay, disruption and general damages.
  • No information was provided to demonstrate either the entitlement or the value.
  • An adjudication was commenced to recover the monies deducted.
  • The Adjudicator agreed that the evidence did not support the charges and the claim was reduced from £1.2m to £12,000.

3. Case Study – Breach of Contract

  • An Employer decided that a Contractor was in material breach of its obligations under a contract.
  • Due to its belief the Employer embarked on a particular course of action against the Contractor.
  • The Contractor disagreed and commenced an adjudication.
  • The Adjudicator issued a declaration that the contractor was not in material breach of its obligations and that the Employer was wrong to act as it had done.

These are some of many such success stories. Adjudication is the principal avenue for resolving construction disputes.

This experience can work for you too, why not call us on 01992 704704 or 0845 604 8322? We are confident we can provide you with an expert service cost effectively.