Adjudication Under The Act (Part 2)

Adjudication Under The Act (Part 2) – The Adjudication Notice

Here is the second post in a series of three about the Adjudication process under the Construction Act. This covers the Adjudication Notice.

Starting the Process – The Adjudication Notice

Once you are satisfied that you have a dispute that can be adjudicated, the process is started by way of written notice (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.

As a very minimum the notice must contain the following:

• Nature and brief description of the dispute.
• When and where the dispute arose.
• Nature of the redress being sought.
• Names and addresses of the parties to the contract.

The Adjudication Notice must be served on the other party before you approach an Adjudicator Nominating Body to appoint an adjudicator. The ANB will normally require a fee for them to appoint an adjudicator.

Once appointed the Adjudicator will write to both parties advising them of his/her appointment.

adjudication notice

The Referral Notice

The Referral Notice must be issued to the Adjudicator within 7 days of the issue of the Adjudication Notice. There is usually a fair amount of work in the preparation of the Referral Notice even in the simplest of disputes. It is for this reason that in the vast majority of cases the Referral Notice is prepared before the Adjudication Notice is served.

The 28 day period for the Adjudicator to make his/her decision starts on the date the Adjudicator receives the Referral Notice, provided of course that it has been served within 7 days of the Adjudication 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 have to 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 that you and the other party, as participants in the process, spend on your own legal, expert or commercial advice.

Who pays the Adjudicator’s costs?

Who pays the Adjudicator’s costs is one of those matters that depends upon the terms of the adjudication procedure. 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.

Often, the Adjudicator will decide that the party ‘losing’ overall must pay their costs. However, this is not 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 is not the end of the matter since both parties are jointly and severally responsible to the Adjudicator for their fees. This means that if the other party does not pay, you will have to: if one of you defaults on payment, or becomes insolvent, the Adjudicator can legally demand those fees from the other, leaving that other party to recover from the defaulter.

It is also worth remembering that the Adjudicator is under a duty to avoid incurring unnecessary expense.

The Adjudicator has obtained expert advice – do I have to pay for this too?

Provided the parties have been notified first, the Adjudicator is entitled to appoint experts, assessors or legal advisers as required. Within the general requirement to avoid incurring unnecessary expense, the costs of any such external advice will form part of the Adjudicator’s costs. Similarly, the Adjudicator may require tests or experiments to be carried out and the costs of these will also form part of the Adjudicator’s charges.

What will the Adjudicator charge?

There is no set rate for an adjudicator; a range of hourly rates are charged. The total amount will depend upon the complexity of the issues and the length of time the adjudication takes. If the Adjudicator was named in the contract or agreed by the parties, then the hourly rate should be agreed at that time. However, if the Adjudicator is nominated by an Adjudicator Nominating Body there is no opportunity for the parties to agree an hourly rate and the Adjudicator must set a reasonable rate.

Can I ask the Adjudicator to award me my costs?

Whether the Adjudicator has the power to award the parties’ costs (as opposed to the Adjudicator’s own costs) depends upon the terms of the adjudication procedure. Under the Scheme the Adjudicator does not have this power, and many, but not all, specially written procedures specifically provide that each party pays its own costs.

Need Further Advice about the Adjudication Notice?

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 is nonetheless a legal process and not one to be undertaken lightly.

If you have no experience of legal process, then it is 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 are on the receiving end of an Adjudication Notice!

You can call us for initial no cost advice on 01773 712116, and our Gold and Platinum Buddies can use their commercial and contractual consultancy to establish the best course of action. You can also reach us via the Contact page of the website.

Whatever level your business is at, and whatever your specialisation I want to encourage you to experience and enjoy a better more profitable, less stressful way.

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