Current trends in Adjudication

Adjudication has become increasingly popular as a forum for resolving payment disputes in Ireland. With mounting materials costs and ongoing labour shortages, construction disputes are on the rise.

In the second instalment of our series of webinars focused on the construction industry, RDJ Partner Finola McCarthy and Construction Consultant Denise Kennedy were joined by guest speakers Keith Kelliher, Chartered Quantity Surveyor and Accredited Adjudicator, and UK based Sean Smylie, Chartered Quantity Surveyor and Adjudicator, to discuss some of the practical issues to be aware of for adjudication.

Here are some key takeaways from that discussion:

• Some of the common mistakes made by referring and responding parties arise from the incorrect use of the template forms which are provided by the Construction Contracts Adjudication Service (CCAS). The forms are stated to be for guidance only and there is a misconception that the templates must be used. They should be used with caution.
• The timescales in adjudication are challenging and must be complied with. In Ireland, a responding party is typically given 7-10 days to submit a detailed response to the claim to include all supporting documents on which they rely to defend the claim. In the UK 7 days to respond is considered the norm however Sean Smylie’s practice is to allow 10-14 days subject to the complexity of the dispute. The referring party is usually given the last word in the shape of a reply.
• It is up to the referring party to prove its claim on the balance of probabilities. It should not be for the responding party to disprove the referring party’s case. There is a misconception in many cases that it is sufficient to use spreadsheets as evidence of a claim. Remember that spreadsheets are just a presentation tool only. It is important to provide back up using contemporaneous records to support the claim and the response to the claim.
• There were differing opinions on the need for witness statements in adjudication. If there is no opportunity to cross examine witnesses at a hearing, it was felt that adjudicators should not rely on the witness statements unless there is also contemporaneous evidence to support the information in them. The recent English Technology and Construction Court case of Mansion Place Limited v Fox Industrial Services Limited [2021] EWHC 2972[1] & [2021] EWHC 2747[2] is an interesting case on point. The judge also commented that it was inadvisable that the claims consultant (who was a witness of fact in the case) had prepared the statement for one of the witnesses, where the claims consultant already held a view as to where the merits of the dispute lay.
• There is a growing role for expert evidence in adjudications. For example, in extension of time claims, expert programmers reports such as critical path analysis reports are important. It remains challenging for a responding party to obtain expert evidence within the 7-10 day timescale for submission of the response. It was noted that there seems to be greater use of expert evidence in UK adjudications.
• There is still some uncertainty around the extent that cross-claims can be used, such as the application of liquidated and ascertained damages, to limit the financial exposure of claims. In Ireland, adjudicators have been taking different positions on the issue. It is a matter of natural justice. The Irish High Court case of Aakon Construction Services Ltd v Pure Fitout Associated Limited is helpful – it mentions that the notice of intention to refer should be interpreted as encompassing any legitimate available defence. In Principal Construction Limited and Beneavin Contractors Limited [2021 IEHC 578][3] in relation to a challenge that the adjudicator had refused to allow the responding party prosecute its counterclaim for liquidated damages, on the facts it was held that the adjudicator had adequately considered the matter of delay.
• There would be benefit in the Minister’s Panel of adjudicators coming together to discuss practical issues that come before them, particularly given the gaps in the CCA in relation to key issues such as the default payment position in the absence of a response to payment claim. This would facilitate a more uniform approach to dealing with some of the core issues that are yet to come before the courts. In the UK, for example the RICS conducts regular interactive workshops for the RICS panel of adjudicators to enhance their core competencies.
• Adjudication is still at an early stage in Ireland and will benefit from more case law in the Irish courts to flesh out the issues.