Extra ammo for clients

Most people in the construction industry are aware that the Construction Act applies to building contracts. However, how many people know that it applies to contracts for most kinds of professional services associated with construction works? Section 104 (2) of the act defines a construction contract as including an agreement to do architectural, design or surveying work or to provide advice on building, engineering, interior or exterior decoration in relation to construction operations. Although supervision and general contract administration are not expressly covered within this definition, contract administration (including certification), as well as design responsibilities, are covered.

The type of claim being referred to adjudication often involves defective buildings. On the basis that the contractor built it and that there are problems with it, the first port of call is likely to be the contractor. However, what happens if the contractor is no longer trading, or if the cause of the problem is not simply attributable to bad workmanship? In such circumstances the employer may wish to bring adjudication proceedings against the design team for faulty design, lack of adequate site supervision or failure to properly administer the contract.

Another common scenario is where the contractor brings an adjudication claim against the employer for an extension of time and for loss and expense. The reason for the delay may be the failure of the design team to issue instructions on time or arising from a redesign. The delay may be extensive and involve the employer in not only losing the benefit of liquidated damages but also in paying the contractor's loss and expense. In addition, if the building is completed late, the employer will suffer a double blow of reduced income from the building and increased finance charges. In such a case, the employer will wish to recover from the design team as quickly as possible.

At present, Section 8 of the Scheme for Construction Contracts allows the adjudicator to deal only with the dispute actually before him. He cannot adjudicate on more than one dispute under the same contract or on related disputes under different contracts unless he has the consent of all the parties to those related disputes.

In normal circumstances, the employer will not be able to bring a claim against both the contractor and the design team unless it has first obtained the consent of all the parties to the dispute. This means that the employer will have to proceed against the design team in a separate adjudication, and there could be conflicting decisions between the two adjudications.

Clients may opt to sue their design team if the contractor goes bust

Appointments should be drafted to allow adjudication

Designers should check to see if their PII covers them

Multiparty adjudications are not common and consent is unlikely to be given. Employers should therefore consider putting joinder provisions into both the building contract and any appointment to enable it to join in members of the professional team and/or the contractor without requiring further consent.

It is important to remember that only claims arising under the contract can be referred to adjudication. This means that a professional negligence claim arising in tort will not be covered by the act, even if the claim arises out of construction operations.

However, as long as the appointment of the professional team member has been properly drafted to include an express term requiring him to perform his services with "skill, care and diligence", the claim will be subject to adjudication.