Adjudication
Statutory adjudication has been with us for just over 6 years and in that time it has become the most popular method of dispute resolution; there have been some 12,000 referrals and only around 30 reported refusals to enforce by the courts. Most referrals are to the RICS (some 1,000 per annum), followed by the RIBA (300), ICE and AICA (100 each). Although it appears that there is a plateau in the number of referrals, there could be a shift in the distribution if the JCT deletes its default adjudication procedures within its family of contracts.

The Housing Grants, Construction and Regeneration Act 1996, was brought in essentially to aid confidence of payment in construction contracts. The Construction Act introduced a quick, easy and cheap provisional answer to disputes. Quoting Lord Denning in Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd (1973) 3 All ER 195: “There must be a cash flow in the building trade. It is the life blood of the enterprise”. Adjudication has been an outstanding success in redressing the balance of power between the payer and payee.

As Sir Michael Latham reviews the Housing Grants, Construction and Regeneration Act 1996, the UK statutory adjudication is the model that is now being adopted overseas, which must be a testament of its success. Legislation has been brought into New Zealand (Construction Contracts Act 2002), and the states of NSW and Victoria in Australia (Building Industry Security of Payment Act 1999 and Building and Construction Industry Security of Payment Act 2002 respectively). There are also interests in parts of Europe and the West Indies. The features of the NZ and Australian Acts are similar to that of the HGCR, although there are some notable differences. For example, the NZ Act applies to residential as well as commercial construction contracts and under certain circumstances that are set out in s 56, the Adjudicator can award party costs. Under s 25 of the NSW Act, one remedy for non-compliance of an adjudicator’s determination is that the adjudication certificate can be filed “as a judgement for debt in any court”.

© Michael Gerard Consulting Limited
October 2004