Are my friends in Northern Ireland ready? I expect you are every bit as ready as the folks across the water were. And I expect you will be lulled, as they were, into thinking it was to be a non-event. They took about eight months to see the system work. By now, adjudication has become commonplace and we have learned oodles. Let me give you a few tips.
Concentrate on the payment rules first rather than the more glamorous referee idea. The reason is because if you operate the new payment rules right, you are less likely to need the referee. How come? Well, at the heart of most disputes is “perception”, or sometimes the deep suspicion, that the bloke doing the paying is a rip-off merchant looking for any excuse to shaft the payee.
The payment provisions are very clever; they deal with off-hand behaviour. You know what I mean: the bloke responsible for calculating what’s due has a hangover or is idle. So he puts in a sum of money to be paid that errs on the side of caution – his caution, not yours. He hasn’t done a proper calculation so he dreams up a figure and says: “Sod it, that’s good enough.” That won’t do any more. The reason is that the payer has to inform his payee what he intends to pay and how he gets to that figure.
Don’t think you can get away with a “say” figure in lump sum terms. No later than five days after what’s known as the due date, the green light flashes. You send the green notice to the payee giving a proper breakdown of the sums calculated. The rules require you to specify the amount proposed to be paid, and the basis on which the amount is calculated.
All this is a pain to the main contractor on a big site. Each month he might have 30 subcontractors to send a green notice to. If the notice is broad brush or non-existent, the adjudicator is called up, and they will take a dim view of the QS who slashes the subbies’ application without saying why. You could easily find that the adjudicator will order the subbies’ application to be paid in the absence of a proper notice advising the basis for the reduced payment. On the other hand, an effective green notice properly broken down into the measured works, variations, loss and expense, materials on site, looks very professional. Time-consuming? You bet. But this is new-look contracting.
Northern Ireland knows a thing or two about dispute management. Go for it in construction
So far we have dealt only with the work measured and due. What about “contras”? You know what I mean – simply because there is an R in the month, you want to withhold cash. Previously, you would just do it. Not any more. From Tuesday, these new contracts not only have the green notice but the amber notice, too. Don’t get caught out. Introduce that amber notice from next week, on every job. It goes to the payee on a set date prior to the date for payment. Miss the date, and the boat has sailed. You can’t withhold. In real life you will withhold, but in real life the referee will boot you off the pitch.
Talking of leaving the pitch, watch out for the red notice. It is a new signal that the contractor is about to take his bat and ball away and postpone performance, because you haven’t played the notice game when paying.
Your new adjudicators are already in place in Northern Ireland. Trained and tested and waiting to go. Don’t try bringing a whopping bag full of quarrels in one go. It is too much for one referee in 28 days. Make sure the dispute referred and arguments developed are previously canvassed between the parties.
Give the referee a file with both sides’ letters and arguments. Don’t rely on having the chance to ambush the other side with new arguments. Experience shows that adjudicators expect the arguments to have been explored before reaching for the ref.
Tony Bingham is a barrister and arbitrator specialising in construction.