Householder Construction Contracts are not covered by the Adjudication provisions of the Construction Acts and thus there is Statutory right to adjudicate without an agreement between the parties. There are also no strict procedural rules for householders to comply with other than what maybe agreed in the contract.
The HGCR Act 1996- (the Construction Act) at section 106 describes the contract type as that of the "Residential Occupier" and this is where consumers are excluded from the rights given by the Act in respect of payment and adjudication amongst other matters.
If the works relate to a property that you intend to use up to 65% of as your own private residence it is classed as a Householder or Consumer Contract.
If there is an Adjudication clause it must be fair and comply with Consumer Legislation. If the clause has not been individually negotiated with the Consumer there is a risk that the clause might be held to be onerous and void. To deal with this risk the Consumer must have either proffered the contract, used professional consultants in the contract procurement, consulted a solicitor or had the clause explained with evidence to comply with Consumer law.
If the Adjudication clause is deleted or there is no Adjudication clause, there is no contractual right to Adjudicate. An agreement to Adjudicate can be drawn up at any time, however both parties have to agree and there is no obligation to do so. The defending party is most certainly not going to agree to anything, thus in consumer contracts agreement is recommended at the outset.
The first rule for householders BEFORE engaging a builder to work on your home is to obtain professional advice from a firm like Arbicon. The procurement of the work must be carried out properly otherwise serious problems can and all too often do arise.
We receive countless calls from householders who have fallen out with their builder, who was their friend or close to them that has taken the money and run leaving an aftermath of destruction. In every case the victims have no contract in writing agreed with the builder and no adjudication clause. We also receive a lesser number of calls from builders who have not been paid. With no adjudication clause, the option is Court proceedings, which can take years and legal costs well beyond the value of the claim. Most householders do not have the resources or time to pursue the builder thus the matter has to be written off costing much more in rectifying the problems and misery.
When you buy a house you would never do so without professional help (solicitor, surveyor, etc), why would you spend a fortune on a builder who you must never trust without any professional help?
Here are 10 essentials you must do when employing a builder:
- Builder Identity, Credit worthiness Reputation Checks before you start.
- Written Contract properly drafted
- Payment Terms Defined - No advance payments or Front Loading of Charges
- Quality Control
- Work Complete and handed over on time
- Defects & Retention Procedure
- Design Insurance & Guarantees given
- Termination/Repudiation/Suspension Management if necessary
- Use Arbicon from start to finish to manage the process
- Adjudication Clause
Taking point 10 above a simple adjudication clause included in the contract can give the parties access to swift inexpensive justice whether too much has been paid or not enough!
If you are a householder or a builder in dispute please take your time to read the following FAQ's. Please do not hesitate to call us or e-mail us with any questions you may have the subject.
What is Adjudication?
The Construction Industry has the highest incidence of disputes. Construction work can be complex in nature and suffers major problems with payment disputes. A culture of excuses and taking more payment than is due are normal characteristics for construction companies, unless you impose contractual and legal means to make them work for their money. Put simply if you do not understand what you are getting or what you are paying for, you run the risk of paying too much too soon for poor or incomplete work resulting in the builder leaving and not coming back and you permanently out of pocket.
In dealing with construction disputes it has proved to be expensive, painful and impossible to use the Court, it takes too long and costs too much, so Adjudication has evolved into the route for most disputes. Adjudication has been used extensively and very successfully for the past two decades following Construction Legislation (that does not apply to householder contracts).
The Law of Construction Adjudication is now extensive and established with over 500 cases decided in the TCC. With a properly written Adjudication clause, householders have access to this law and an excellent dispute resolution process, if it is incorporated in to the contract.
Adjudication is a contractual process which provides an interim "quick fix" solution to disagreements between two contracting parties. It involves the appointment of a third party Adjudicator to decide the dispute, takes an agreed number of days, 28 typically to complete and the resulting Adjudicator's decision is binding between the parties on a final or interim basis. The Adjudicator charges a fee and he decides who pays, normally the loser.
As stated Adjudication is a contractual process so for the householder it is only available if agreed in the contract or by a written agreement drawn up separately.
Adjudications are commenced when there is a dispute between the parties. The dispute can be for almost anything in the contract but will always come down to one party owing the other money. The Adjudicator’s Decision will order immediate payment from one party to the other together with any interest. Party or legal costs are generally not recoverable. Debt recovery costs would have to be written into the contract as again the Late Payment Statutes only apply for Commercial Contracts so such rules are not available.
Payment under an Adjudicators' Decision usually must be made forthwith, failure to comply with such an award will allow the winning party to swiftly enforce the Decision in Court by applying for summary judgement.
If you are in a householder construction contract and you are served with a Notice of Adjudication the time constraints are seriously short thus you need to act immediately by calling Arbicon.
Arbicon specialise in the Adjudication process, construction law and executing successful adjudications. It is thus recommended that you make that important call to this office at the earliest opportunity to meet your Adjudication needs.
I have not agreed to Adjudication in my contract, I have agreed to Mediation or Arbitration only, am I exempt from or can I exclude an Adjudication?
Yes, if you are a householder there is no right to Adjudicate without an Adjudication agreement, but if you have a Mediation or Arbitration clause, these would apply subject to Consumer Law.
What does adjudication cost? If I win will my costs be recoverable?
Adjudication is a contractual process, thus it is possible to agree the procedure as to costs of the adjudication.
The costs typically are; (1) The Adjudicators fees and expenses; (2) The Party Representative(s) fees and expenses; (3) The Adjudicator Nominating Body appointment fee.
(1) The Adjudicators fees and expenses
The Adjudicator will normally at the outset advise the parties of his rates for charging, normally an hourly rate plus disbursements. At the end of the adjudication he will advise the parties of his total fee and who has to pay it. The apportionment of his fee is totally at his discretion, but it is usual for the loser to pay. There are no real yardsticks for the typical values of these fees as it depends on the complexity of the case. There are adjudication schemes for householders where the hourly rate is as low as £100 per hour plus VAT, with a cap on the number of hours that can be charged. However, do not be surprised at hourly rates between £200 and £350 per hour plus VAT.
(2) The Party Representative Fees and Expenses
This is the cost of employing a professional specialist to act on your behalf such as Arbicon. Party costs are not normally recoverable and in a householder contract and such right would have to be expressly agreed. Where no cost award can be made, it has been our experience that the value of interest awarded can cover the cost of our fees. There are no statutes that give any rights to consumers in respect of interest or debt recovery costs.
(3) The Adjudicator Nominating Body Appointment Fee
The Adjudication clause will either name an Adjudicator or an Adjudicator Nominating Body (ANB), who either party may engage in the commencement process of the Adjudication. If you do not have a named Adjudicator in your contract and you cannot agree on the appointment of the Adjudicator then you can ask the named ANB to appoint an Adjudicator for you. There is a fee for doing this depending on who the ANB is, normally around £300 to £500 plus VAT. However, if there is no named ANB and the Scheme has been incorporated, you may choose any ANB to make the appointment, some good ones such as CEDR are FREE.
Any ANB costs are considered as a party cost (as in (2) above) and not an Adjudicator cost, thus in the absence of an agreement to deal with it in Adjudicator will not make an award for its recovery.
I would like to proceed with an Adjudication, how do I start Adjudication?
Arbicon are the first people to consult in order to proceed with an Adjudication. Whether we are to act as Adjudicator or Adjudication Advocates (your representatives), it is important that you speak to us first so that you make the appropriate decision and preparation.
Arbicon appointed as Adjudicator
If you wish us to Act as Adjudicator or one of our Adjudicator's is named in your contract, please contact us
Your request will be dealt with and one of our consultants will be in contact with you promptly within 24 hours.
Arbicon appointed as Adjudication Advocates
If you wish us to fight your case for you essential preparation is required first. We will guide you, by preparing your case by identifying the scope of the dispute, analysis of the contractual rights, conducting an investigation into the law and assessing the quantum. A narrative and evidence is collated which is then argued to a desired successful conclusion.
Arbicon can provide a one hour initial consultation at their offices in Peterborough where you supply us with the contract and all other relevant documents so that your case can be properly evaluated into a proposal. We will tell you if you have a case or not. Our team works together on each case, so that the law and remedies to issues are cross checked and no stone is left unturned. We will then build the case to "Adjudication Standard". This is important as if you pursue a claim without the evidence you will fail. Do not assume the Adjudicator will help you or read your mind, if your points are not clear or set out properly with evidence, you risk failure. Nearly all Adjudications prosecuted or defended by Arbicon have been successful, this is due to a methodical approach, experience from many years of practice and handling hundreds of cases.
Once the subject matter of the claim is identified and valued, it is important to identify if the other party has been served with all the details of any claim. Any missing detail should be served prior to the issue of proceedings so that it is possible for a "dispute" to exist or crystallise.
If the claim is then subsequently denied or ignored after a reasonable deadline has expired, you have your "dispute" and you are ready to proceed to the starting line of the Adjudication.
A "Notice of Adjudication" is served on the other party. An essential document, which gives only brief details of the Adjudication, naming the parties, the dispute and what exactly the Adjudicator will be asked to decide and it legally gives the Adjudicator the scope of "jurisdiction". The adjudication starts here.
The Adjudicator when appointed will then set the timetable, either in accordance with the contract clause or by his own initiative. The Adjudicator will typically dictate what submissions are to be made, how long each party has to complete them, whether a meeting is necessary or not and how long he will need to make the Decision.
If you would like a Consultant to call you back to discuss Arbicon helping you with your dispute please complete and submit our form.
I do not want the appointed Adjudicator, I would like someone else to be appointed, how can I do this?
If the Adjudicator has been validly appointed in accordance with the contract you will not be able to remove the Adjudicator. However, as stated before, adjudication is a contractual process, thus it is possible to dispense with the Adjudicator by agreement with the other party, although this is highly unlikely. The other only option is to persuade the Adjudicator to resign. This might be on the basis that he has an interest in one of the parties and cannot deliver a balanced unbiased decision.
Conclusion
Construction Adjudication is the most practical, least expensive and best way for parties to solve disputes quickly compared to Court proceedings. It has developed into the most powerful means to achieve justice in construction contracts. However, professional help from Arbicon is essential to conduct the process.
It is thus essential that when appointing an Adjudicator or when seeking Representation, that professional help from a firm specialising in Adjudication, are Chartered Quantity Surveyors with Expertise in the Practice & Procedure of Adjudication, such as Arbicon be consulted.