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KNOW YOUR LIMITS

LEGALLY

The construction industry is quite used to dealing with adjudications while work is still in progress, writes Sarah McNally.

Indeed, one of the challenges is to respond to matters in a short time frame while resources are being concentrated elsewhere.

Recently, however, in Connex South Eastern v MJ Building Services Group (judgement 01.03.05), the courts have had to address the rather different issue of whether there is any time limit within which an adjudication under Section 108 of the Housing Grants Construction and Regeneration Act 1996 must be commenced.

The dispute arose out of a project to provide CCTV for Connex's car parks and stations.

The contractor commenced adjudication proceedings 15 months after it had purported to accept a repudiation of the contract by Connex (which denied the existence of the contract, and thus its liability to pay the sums claimed). The adjudication was stayed and court declarations sought, some of which were appealed. There were a number of interesting issues arising - including the question of time.

Connex argued that, while the 1996 Act states that notice of adjudication may be given 'at any time', this could not be read literally. If, as a result of the passage of time, it is not possible to have a quick, cheap and temporary adjudication, it should not be allowed - it should be held to be an abuse of process.

These arguments were rejected by the Court of Appeal, which held that the phrase 'at any time' means just that. The court also considered comments made by Parliament while the Act was being passed that supported this view.

Of course, it may be that the parties have acted in such a way that they have totally lost the right to adjudicate - for example, they may be held to have waived their rights or have been stopped from relying on them.

It may also transpire that a party has a good defence to any claim because the time under the Limitation Act 1980 (the period within which proceedings must be commenced whatever the forum) has expired. That would not preclude adjudication proceedings from being started but they may well be totally stopped in their tracks if the point is argued successfully before the adjudicator.

Finally, the court said that, since the statutory scheme does not make provision for a claim to be struck out as being an abuse of process, no such power exists.

Thus, adjudications will still spring up long after the dust has settled, but parties would still be well advised to get proceedings moving expeditiously. Quite apart from the possibility of claims becoming barred by the Limitation Act, or the parties inadvertently waiving their rights, it will be harder to collect and present evidence as time goes by. They must also consider whether, if time is not the critical factor in the process, adjudication is the most appropriate dispute resolution procedure in any event.

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