Adjudication has become such an established part of the construction scene over the past seven years that it is easy to forget what an extraordinary thing it is.
No other industry has such a statutory scheme for mandatory 28-day interim dispute resolution, partly because no other industry had construction’s size, complexity, disorganisation and dysfunctional payment culture. Its primary purpose was, in Lord Denning’s famous phrase, to keep the lifeblood of cash flowing to the subcontractors. If the standard picture of the construction team used to be the main contractor with its thumb on the carotid artery of the specialist, adjudication was a swift knee in return.
Adjudication has grown fast. It has grown in complexity. It has developed grey areas, particularly over whether new evidence can be introduced once proceedings have begun. It has become barnacled by enforcement proceedings and Appeal Court judgments; it has attracted QCs, conflicting judicial opinions and hundreds of column inches in the legal pages of Building. Latterly, those articles have referred to just how expensive adjudication has become. Last September, Robert Akenhead told us about a case with costs of £100,000. Now one lawyer has taken the argument further. Toby Randle, an associate with Fenwick Elliott, is advising clients with large disputes to go straight to court (pages 50-51). He says what was a “pay now, argue later” process has become “argue now, argue later”. The battle between Cleveland Bridge and Multiplex over Wembley appears to be a case in point.
Randle argues that adjudication still works for small disputes. Yet there are problems here as well, as highlighted by research conducted by Building and law firm Hammonds (page 52). This shows that, for disputes worth less than £50,000, the average fee charged by the adjudicator is greater than 5% of the sum claimed – more than double the average for disputes worth more than £100,000. Adjudication is often the only resort for such disputes, so to see costs grow so much is worrying.
Adjudication is being scrutinised as part of a review of the Construction Act. Judge Anthony Thornton suggested last June that disputes over final sums, as opposed to interim payments, be removed from the ambit of the act. The idea is sensible, as is the imposition of a ceiling on the amount claimed. Adjudication may be, as Thornton wrote, “a legislative triumph”, but for how much longer?
The Bryson test
Do you remember the first time you read Bill Bryson’s Notes from a Small Island? His account of Britain, its peculiarities, its pretensions and its failures was painfully funny, and painfully accurate. Remember the Dover B&B in the 1970s where he watched My Neighbour is a Darkie? Or the restaurant in the 1990s where he considered ordering water drawn from the house tap, served in a cylinder of glass? It wasn’t a new idea – the same ground had been covered in Mark Lawson’s The Battle for Room Service. Bryson’s book was better, partly because it was wittier, and partly because it was written with the clarity of the enthralled outsider. That fact that he would write a very different book today (pages 26-28) is one of the best endorsements the urban regeneration process, celebrated at this week’s Urban Summit, could hope to receive.