Adjudication fears founded on the negligence of professionals
The Housing Grants Construction and Regeneration Act took a brave step in 1996 when it attempted to define what was, and was not, a construction contract. Previous attempts to ring-fence construction works had been overwhelmed by the enormous diversity of construction operations. A construction contract was, much like an elephant, easier to recognise than define.Nevertheless, the legislature threw its net wide and did a passable job of pinning down the beast.
One category that was fairly and squarely caught by the statutory definition was an agreement to do architectural or design work. Thus, a dispute arising out of an architect's engagement could be referred by either party, at any time, to adjudication.
In the early days of adjudication, insurers expressed fears that they would be required to pay up sizeable sums of money within timescales hitherto wholly unheard of within insurance circles. The well-known construction commentator Ian Duncan Wallace dismissed these fears as unfounded. Employers, he confidently predicted, would not bring adjudication claims against construction professionals.
And for a long time he was proved correct. Disputed valuations and final accounts were taken to adjudication. The courts continued to deal with allegations of professional negligence, usually arising out of sizeable projects long after the work was completed.Adjudicators would churn out their valuation decisions within 28 days while judges pondered conflicting expert evidence over the weeks or months it takes to do justice to complex allegations against professional people.
In its fifth report, published in February this year, the Adjudication Reporting Centre at Glasgow Caledonian University reported that adjudicator nominations have levelled off at about 2,000 per year.The vast majority of claims are for less than £100,000 and the bulk of them concern variation and final account claims. Only 5 per cent of claims concerned defects and extensions of time.None were described as professional negligence claims.
But this appears to be changing.
A steady stream of claims against professionals are now being referred to adjudication. The professional indemnity insurers' worst fears of being required to stump up within 28 days are slowly being realised.
Despite parliament's intention to the contrary, there are many reasons why it may not be suitable for claims against construction professionals to be dealt with in adjudication. These include:
lThe discipline of the adjudicator - most adjudicators are quantity surveyors. Less than 10 per cent, for example, are architects. If allegations of negligence are made against a professional, it is to be expected that they will be decided by someone who knows what is to be expected of them. If the tribunal lacks the relevant expertise, independent expert evidence is required. It would be harsh for a quantity surveyor to find an architect wanting in their design or supervision without having heard from someone qualified to say what an architect ought to have done in the circumstances. It is highly likely, however, that in the fearful rush to reach a decision quickly, an unqualified tribunal will decide that the design was defective or late without troubling to ask whether the cause was negligence.
l Timing - it is seldom possible to judge a design or the implications of contract delay until after the project is completed. By that stage, however, it is hard to justify the need for a speedy 28-day decision.
Why struggle to force an unwieldy quart into a rough-and-ready pint pot when the project is completed and up and running?
l Timetable - it is hard enough to prepare a disputed variation account within the 28 days allowed. It is almost impossible to instruct independent experts, produce witness statements and copy project documentation in order to put the adjudicator fully in the picture. The prospects of a just result reduce incrementally with every midnight hour spent cobbling the case together.
l Unsatisfactory results - against this background it is highly likely that neither party will be satisfied with the result. After taking stock of a hurried and inadequately reasoned decision, it is more than likely that the parties will opt to take their dispute on to litigation or arbitration, where some would say it ought to have been from the outset, thereby rendering the adjudication experience a complete waste of time.