There have been more than 300 court decisions that ‘clarify’ the meaning of the Construction Act. The result is that only our learned friends really understand what the rules are
I doubt anyone expected that 10 years after the launch of the Construction Act there would have been about 300 cases clarifying its meaning. Only a handful of these have been about the payment regime. Most have concerned adjudication – and therein lies a growing problem.
There is little let-up in the stream of court judgments saying something new. Adjudication users must know the cases and stay up to date as more come out. One example is the recent judgment in Harris Calnan Construction vs Ridgewood. This suggests that a defendant cannot challenge an adjudicator’s jurisdiction when a court comes to enforce their award if it had not expressly reserved its right to rechallenge jurisdiction during the adjudication. It is not enough solely to challenge the adjudicator’s jurisdiction during the adjudication.
Most responding parties in adjudications already reserve their position anyway, so this judgment mostly affects small developers and contractors and homeowners who try to conduct their own adjudications. Lawyers sometimes say that a litigant in person has a fool for a client. But is the party to an adjudication who invariably will not recover their legal costs, even if they win, not just a victim of a system that is too technical?
Unfortunately, in Harris, a key Court of Appeal case was not cited – it seems because the defendant was not represented. Had it been cited, it would have suggested that the judgment was wrong in making it so easy to lose the right to rechallenge an adjudicator’s jurisdiction.
This only highlights the difficulty of staying in touch with all the relevant judgments. In fact, it is not always sufficient to be up to date. Adjudication users can be affected, retrospectively, by judgments in other cases before the adjudicator’s decision is complied with. This is because a judgment states the law as it is deemed to have always been. To illustrate how this works, here are two examples from last year of fresh ways in which adjudicators’ decisions might be unenforceable.
First, we learned in 2007 that various sets of adjudication rules drafted by leading industry bodies were invalid in their entirety because they provided for adjudicators’ late decisions to be enforceable in certain circumstances. The rules made this provision with the admirable aim of avoiding the wasted time and cost of late and therefore invalid adjudicators’ decisions.
This development was particularly surprising because higher authorities had previously said the rules in question complied with the Construction Act. Unlucky parties that had started adjudications under the rules, whose opponents were not prepared to waive the issue, were left with the difficult choice of whether to restart adjudication or risk proceeding. It is hard to gauge how many of the 150 or so adjudications that are running at any time were affected.
Last year we were told for the first time that if referring parties paid adjudicators to release decisions, they might be unenforceable because of of the appearance of bias
Equally affected were decisions reached under invalid rules that had not yet been complied with. Overnight they became potentially unenforceable.
My second example from 2007 relates to the practice by many adjudicators, for much of the first nine years of statutory adjudication, of requiring payment before releasing their decisions. This practice seemed to persist, despite courts saying from 2003 onwards that adjudicators ought not do it.
However, last year we were told for the first time that if referring parties paid adjudicators to release decisions, these might be unenforceable because of the appearance of bias.
Immediately, decisions previously released in this manner but not yet complied with became potentially unenforceable. Many such decisions were no doubt complied with in ignorance of this change of law. It is hard to tell how many adjudicators still insist on payment of fees before releasing a decision, or how many parties innocently pay them.
In some ways cases like these have helped to clarify the Construction Act. We may soon see a drop in the number of cases that say something new, but amending the act may prompt further cases.
For whatever reasons, adjudication has become too legal. It is hard, however, to see a way back from here.
Rupert Choat is a partner and solicitor advocate at CMS Cameron McKenna