Lawyer Monthly Magazine - August 2019 Edition

be achieved within such a brief 28 day period almost of necessity fairly broad brush in its nature is sometimes said to be of a variable quality. To offset this, an Adjudicator’s decision is what the law in the UK refers to as “temporarily binding”. This means that despite having engaged in adjudication, the parties are still at liberty to refer their dispute to the Courts through litigation where the time can be taken to arrive at a more considered verdict, however in the interim they must comply with the Adjudicator’s decision. There is no doubt the process of adjudication has seen the demise of the abusive stalling tactics that were once so widespread within the construction industry. At the same time, it is not without its own problems on occasions as some of those who were once on the receiving end of these unsavoury practices have learnt to exploit the system to their advantage and highly speculative adjudication claims are not unknown. These are sometimes referred to as "ambush" or "smash and grab" adjudications. An ambush typically occurs when a claimant spends several months secretly crafting a claim and substantiating it with voluminous (but not always relevant) documentation. Then, at a time of its choosing, the claimant launches an adjudication in the knowledge that the adjudicator has only 28 days in which to conclude the process and deliver a decision. To meet that timetable the Adjudicator may direct that the unfortunate defendant is only be allowed seven days in which to prepare and deliver a defence. Keep in mind that the claim may comprise 20 lever arch files of documentation and be for many millions of pounds. In such circumstances, both the defendant and the Adjudicator are seriously up against it. A smash and grab adjudication arises out of another feature that was implied into construction contracts by the Construction Act and that is the use of the "Pay Less Notice". It is now a requirement of the law in England and Wales that if the paying party under a construction contract wishes to pay less than the amount claimed in say a contractor's monthly interim payment application, then that paying party must serve a Pay Less Notice stipulating what it intends to deduct and why from the money the contractor has claimed in payment. In the absence of a Pay Less Notice served within the stipulated time limit, the claimant contractor is entitled to be paid all sums he has claimed in his interim application regardless of the underlying merit of that application. (The logic runs that having possibly overpaid the contractor in one month the paying party can recover or deduct in subsequent months any overpayment previously made). Unfortunately, despite the Construction Act having been with us for a number of years now, the capacity of paying parties to fail to serve Pay Less Notices within the required time limits never ceases to amaze construction lawyers. A feature of some payment applications made towards the end of projects is the inclusion of very large and very unsubstantiated sums of additional money. Such sums might be included, one might speculate, in the hope that the Pay Less Notice disputing the sums is missed or is late, thus rendering those sums payable. In the absence of a Pay Less Notice the claimant is in a position to quickly launch (and usually win) an adjudication to be paid on the basis that no Pay Less Notice has been issued, regardless of the underlying merit of the claim for payment. The paying party retains the ability to try and recover the sums paid out in subsequent actions but there is no guarantee that the money will be recovered. Brexit uncertainty has somewhat triggered a slump in the construction sector in the UK; why is this the case, in your opinion? The performance of the property market (which is intrinsically linked to the construction sector) has long been regarded as a key economic indicator of nosed developer, when faced with a claim from a contractor (or equally a contractor faced with a claim from a sub- contractor), to simply delay dealing with the claim or delay making payment. The aggrieved claimant would be faced with having to pursue its claim through the courts using the process of “litigation” which invariably is very lengthy and very expensive (A feature of construction litigation when I was a young lawyer was that the costs of the action could often exceed the sums in dispute by the time the matter got to court). With this inmind, it was well understood that if the defendant could drag out that process for as long as possible or adopt tactics to make it as expensive as possible for the claimant to pursue the claim, then there was some chance that the claimant (usually already struggling with cash flow in any event) would become insolvent before it could ever see its day in court and as a consequence that claim might just ‘go away’. In response to these practices Parliament in this country introduced the “Housing Grants, Construction and Regeneration Act” (often colloquially referred to as the Construction Act) which implied into all construction contracts in England and Wales the dispute resolution process of “adjudication”. As a procedure, adjudication is at the other end of the spectrum to litigation and has often been described as a "rough and ready" form of justice because the Adjudicator (who is not from the Judiciary) is obliged to deliver his decision within 28 days of the process starting. It offers a very quick and very cheap alternative to litigation, however, the justice that may “Unfortunately, despite the Housing Grants Act having been with us for a number of years now, the capacity of paying parties to fail to serve Pay Less Notices within the required time limits never ceases to amaze construction lawyers.” 58 WWW.LAWYER-MONTHLY.COM | AUG 2019 Professional Excellence By Ian Reid, Trowers & Hamlins LLP