Au contraire. Stakeholder accounts take a hatchet to the Construction Act's explicit payment rules, and its implicit intention of keeping the money flowing through the system.
So, Jennie believes that the stakeholder option is legal. Let's disabuse her of this notion. During the debate on the bill in the House of Lords, Lord Ackner had this to say: "What I have always understood to be required by the adjudication process was a quick, enforceable interim decision which lasted until practical completion when, if not acceptable, it would be the subject of arbitration or litigation … It came under the rubric 'pay now, argue later'." As Lord Ackner made clear, the purpose of the statutory procedure was to ensure the flow of cash and enable the work to proceed. The stakeholder option negates that objective.

It is in direct conflict with section 111(4) of the act. Where the adjudicator arrives at a decision on a set-off dispute, such a decision is to be regarded as requiring payment not later than 17 days from the date of the decision or the final date for payment of the disputed monies, if such final date is later.

More generally, section 110 stipulates that: "Every construction contract shall provide for a final date for payment in relation to any sum which becomes due." Following the logic of section 111(4), the due date for payment of the amount decided by the adjudicator must be the date of the decision. There must be a final date for payment stated in the contract or, if not so stated, it will be on the expiry of 17 days from the date of the decision; the 17-day period is inserted in accordance with the Scheme for Construction Contracts. In other words, the act contemplates the "winning" party receiving its money by the final date for payment. No scope for a stakeholder option here. This is also in keeping with the scheme. Under the scheme, the adjudicator may decide the date when payment is due and the final date for payment. In the absence of such directions, compliance with the decision must be immediate on delivery of the decision.

A stakeholder option in contractual adjudication procedures normally envisages that the money remains with the stakeholder until final resolution of the dispute. But what is the point of adjudication if the cash is kept locked up? For Jennie to suggest that such provision complies with the legislation beggars belief! The industry's expectation was that fewer disputes would trundle towards arbitration or litigation: "To decide a matter means to take it into consideration and to settle it." (Words and Phrases Legally Defined, Volume 2). The stakeholder option doesn't help settle matters in the interim; it perpetuates the problem.

Legal