Tony Bingham argues that the adjudication system set out in the Construction Act has been warped into something way more legalistic
The Construction Act was 20 years old on 1 May 2018. It all came about in 1998 because our industry had a nasty habit of finding iffy reasons for holding onto the other fella’s cash. So we invented snappy payment rules. Then we asked what ought to be done if the payer didn’t keep to those rules. Yes, we could go to court or go to arbitration and force the blighter to fork out. Tosh! Going to court or to arbitration in 1998 was like exchanging a clock for a calendar: too slow, too expensive.
So we invented the 28-day snappy-chappy adjudicator: up popped a QS to rummage around, poke at the other QSs and decide who would get to have that cash (or something near it). And that rummage by a QS with an appetite for refereeing would only cost a few bob back in 1998. It was no different from a QS valuation, save that this QS was an outsider to the project – and save that this QS decision was to be obeyed. If it were not immediately obeyed, the High Court would deliver a flea in the non-payer’s ear.
Some folks didn’t go much on all this in 1998. The industry loved it, but lawyers scoffed at it. The lawyers were fond of construction disputes, they were “meat and veg” to many a practice, especially when the dispute was litigated. But this 28-day malarkey was laughable, they thought: how on earth could a construction dispute be resolved in a stupid 28-day sprint from beginning to end?
Actually, it was easy. The QS adjudicator didn’t see the job as a dispute resolution system. Those everyday squabbles about the value of a variation or the value of loss and expense were just, well, valuations. The same went for lots of disputes. This wasn’t judging stuff; this wasn’t for solicitors or barristers – it was industry stuff for industry folk.
This is not the system that’s in the Construction Act. This is full-blown adjudication on Viagra. Adjudicators’ fees are 10 times what was intended and the representatives’ fees are off the scale
Even when the first adjudication came into the High Court, the judge said that adjudication according to this new act of parliament “could be conducted in a manner which those familiar with the grinding detail of the traditional approach to the resolution of construction disputes apparently find difficult to accept”. The judge continued: “But parliament has not abolished arbitration or litigation of construction disputes. It has merely introduced an intervening provisional stage in the dispute resolution process.”
Well, if you can’t beat them, join them. Soon the appetite for fees coaxed us lawyers to beat a path to the door of adjudicating parties. Just a few continued to “do it yourself”, although that’s what had always been intended by the Construction Act. With the lawyers involved, the technical fun started. Those QS adjudicators, who hitherto had used an enquiry type process, were coaxed – some might say intimidated – into “going legal”. Eventually that light-touch “valuation” process became legalistic.
The referral of the dispute became boxes of lever arch files prepared well in advance by a team of lawyers. There is nowadays a formal “response to referral”, a “reply to response”, and then something called a “rejoinder” and even a “surrejoinder”. The 28 days then had to include a site visit and, oh dear, a hearing. Those files now contain witness statements, expert opinion, legal authorities (cases and extracts from learned textbooks and papers). This is not the system that’s in the Construction Act. This is full-blown adjudication on Viagra.
The pace, the depth, the endeavour, the fees are staggering. Adjudicators’ fees are 10 times what was intended and the representatives’ fees are off the scale.
I go this far: we are not conducting adjudications in accordance with the Construction Act; we are sailing under that flag, but using it as a dispute resolution process. I repeat: it is not a dispute resolution process. And yet adjudication is busier now than ever it was these 20 years. I am in awe of the adjudicators who deliver the decisions in such super-fast time.
And I can tell you how it has come about. I can take you to 100 adjudicators who were there in May 1998 – and are still there, the same folk, in May 2018. The system of adjudication has twisted, turned, altered and jumped hoops. These 100 adjudicators have adapted with the 20 years of change. They are all industry people: QSs, engineers, the odd architect here and there. They have carried out thousands of appointments and learned oodles of law and practice here and there. They offer, now, massive experience and high quality. None of them are carrying out “look-sniff” analysis. It is deep, long-hours stuff.
But reflect: Construction Act adjudication is said by very high judicial authority to be a statutory scheme to provide a means of meeting the legitimate cash-flow requirements of contractors and their subcontractors. The need to have the right answer was intentionally subordinated to the need to have an answer quickly – so said the Court of Appeal. But 20 years on we are beating ourselves to a frazzle to use adjudication to find the right answer – and quickly too. Sometimes in that race we even do.
Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple