As construction minister Nick Raynsford has just announced that he is 'keen to keep adjudication quick, simple and cheap', it is useful to remind architects struggling to get paid by their clients - you have a statutory right to use adjudication as a means to recover fees, even if your contract does not include an adjudication clause.
Put simply, adjudication is a process whereby disputes are referred to an individual who comes to a decision within 28 days, that decision being binding upon the parties unless and until it is overturned by a judge or an arbitrator.
Adjudication takes place within a very short period and, as costs are largely a product of time, it is possible to obtain a decision that is binding and enforceable in the interim more quickly and cost-effectively than through traditional forms of dispute resolution.
Adjudication could be said to most closely resemble expert determination. The main difference is that adjudication is a form of dispute resolution that statute has prescribed.
Expert determination, by contrast, is a purely consensual procedure.
The Housing Grants, Construction and Regeneration Act 1996 (HGCRA) provides that adjudication must be available under all construction contracts (as defined by the Act) and provides a framework as to how an adjudication should be conducted. It is not to be confused with arbitration, which is a considerably more regulated quasi-judicial procedure that produces a final and binding decision and is governed by the Arbitration Act 1996.
So why would you consider using adjudication to recover professional fees? It is often perceived as a less contentious step than issuing legal proceedings because it is private, informal and fast.
Also, if your client considers that they have claims against you, you will not obtain summary judgment in court and legal proceedings could be protracted and costly.
Under Section 104(ii) of the HGCRA, you can use adjudication if you have an agreement 'to do architectural, design or surveying work, or to provide advice on building, engineering, interior or exterior decoration or the laying out of a landscape'. A number of conditions must be satisfied:
The contract must have been entered into after 1 May 1998 and must be in writing. 'In writing' is variously interpreted and includes written agreed terms, exchanges of letters or agreements 'evidenced in writing', such as records of a meeting or a telephone conversation.
The contract must have been one for services, because the Act does not cover employment contracts.
Your work must not have been in relation to a house or flat where your client lived or intended to live, because contracts with residential occupiers are excluded from the Act. It also must not have been 'wholly artistic in nature'.
The construction project must be in England, Scotland or Wales.
Assuming these conditions are satisfied, you can commence adjudication proceedings at any time.
Where there is no adjudication clause in the contract, the procedures are regulated by the Scheme for Construction Contracts 1998 (SCC).
What are the possible outcomes of an adjudication under the SCC?
Assuming the adjudicator decides that money is owing to you, he can give a date by which the client must make payment provided you have specifically requested this. The adjudicator also has the power to order payment of interest, whether there are contractual provisions or not.
If your client fails to pay in accordance with an adjudicator's decision, enforcement of a monetary award is usually a straightforward matter of applying to the court for summary judgment. The courts have been keen to uphold adjudication decisions, so the scope for challenge is limited.
The parties are jointly responsible for the reasonable fees and expenses of the adjudicator, though the latter's decision may state that one party is to pay these costs.
In assessing your costs, the main factor will be whether your client has any claims against you and the extent to which these may or may not require detailed or even expert evidence. The SCC is silent as to whether the adjudicator has the power to award a successful party their legal costs, and in a few cases costs have been awarded. However, a Construction Industry Board report published this February recommends that the SCC be clarified so that each party is required to meet its own costs. This should end the debate as to who pays costs, although they will be limited compared with those in traditional proceedings.
Adjudication offers an opportunity for relatively quick, inexpensive and straightforward dispute resolution. It is tried and tested, and the courts have made it clear that they will make every effort to support the process by enforcing decisions. The Act encourages parties to agree procedures to suit the requirements of their company or project. Architects should grasp the opportunity.
Charlotte Griffin is an architect practising as a solicitor at Masons Solicitors, tel 020 7490 4000. The SCC regulations can be found at www.hmso.gov.uk/si/si1998/19985361.htm