Delay and disruption under building contracts can arise as part of a claim for valuation of a variation, or as a result of one of the "relevant matters" described in clause 26.2 of JCT80. These include delay in issuing information, discrepancies in contract documents, postponement instructions and so on. It is essentially these claims and the methods by which they are pursued that have earned the construction industry the labels that now dog it – "adversarial", "litigious" and "claims conscious". It was this reputation that Sir Michael Latham wanted to destroy with the reforms set out in his 1994 report, and which found their way into Part 2 of the Construction Act.
What happens when these delay and disruption claims are presented, and how is this affected by the act? Say claims for delay and disruption arise from variations and the late issue of information by the architect. In the bad old days, the architect would receive repeated applications from the contractor pursuant to clause 26.1. The notices were churned out by the word processor in response to each instruction and drawing issue. Particulars or supporting information were rarely supplied until the interim claim was submitted, many months after the events occurred.
Usually, the interim claim was prepared on a "global" basis, and the architect/QS responded by denying liability, denying the global nature of the submission, and asking for detailed particulars. Some time after practical completion, the final claim was submitted and the claims negotiations commenced, all too often ending in arbitration or litigation. By this stage, the contractor's expectations had been raised by the process of writing the claim, whereas the client had been receiving financial reports from its QS indicating that notices had been received but no further particulars were forthcoming. The client was usually lulled into a false sense of security.
Sir Michael hoped that the threat of quick interim adjudication would revolutionise the old dance. Has it? One thing that the architect/QS cannot now do after receipt of a notification of a claim is ask for further particulars and then sit and wait. It needs to immediately investigate whether the event has occurred and, if so, what effect it is really having on site. The reason it cannot wait is that the information may actually come, followed shortly after by a notice of adjudication requiring a response within days. While employers receiving notices of adjudication in these circumstances might reasonably say to the adjudicator that they have been ambushed, that will not prevent the adjudicator looking at the information received and giving a decision accordingly.
Having acknowledged that the architect/QS cannot, on receipt of the notice, pretend that it does not exist, it is a short step to suggest that, with the contractor, it might start to identify costs that are being incurred as a result of the event notified and a basis for evaluating them. Even if the contractor refuses active co-operation, there is nothing to stop the architect/QS recommending to the employer that it might be prudent to make payments to the contractor to reduce interest charges and forestall adjudication.
One thing that the architect/QS cannot now do following receipt of a notification of a claim is ask for further particulars and then sit and wait. It needs to investigate immediately
If the parties are really pursuing a policy of co-operation and are trying to resolve matters promptly, they may even be able to pre-agree parts of the claim with a procedure for settling the remainder.
In the past, an employer that wanted to settle matters was often met with procrastination from a contractor trying to ensure that the employer had to pick up all the costs in its claim, whether attributable to the relevant matter or not, at the end of the project. Now a client can consider initiating an adjudication on the issue itself and inviting the adjudicator to give a decision on the basis of the information that he or she has assembled as to the loss and/or expense arising from the delay.
One thing is certain: by providing a short timescale as an ever-present possibility, adjudication will ensure that the parties must keep up with their paperwork. Some seem to have interpreted this as meaning that, in addition to the contractor churning out standard notices, the employer and his team should send out standard responses. It is hard to see how this serves any purpose at all.
A few standard letters on file will not be enough to defend a claim that is rapidly submitted to an adjudicator, who will insist on being presented with a reasoned response coupled with an indication of why other aspects of the claim are incorrect. In other words, proper substantive records, not pro formas.
Ann Minogue is a partner in solicitor Cameron Mckenna.