An Adjudication is intended to be a quick, non-binding determination of a payment dispute.
On that basis, of all the professions, it is arguably the Quantity Surveyor who is best placed to carry out such a role. However, a statutory adjudication has become so much more. The dictionary definition of ‘adjudication’ is to settle or determine judicially, and that is a very accurate description of what statutory adjudication has become. But is that what was intended?
For example, let’s consider the adjudicators jurisdiction.
Over the years, the individual state legislation has been augmented by numerous case decisions and clarifications. So much so, that it now places quite onerous constraints on what an adjudicator can and cannot do.
To overcome this problem, some legislators have granted the adjudicator the power to rule on his or her own jurisdiction. Whilst well-intended, it has made a nuanced situation even worse. Most adjudicators will say that almost 50% of their time is taken up dealing with jurisdictional matters because of the numerous and varied issues that have been developed.
In response to a payment claim, the other party (the respondent) is required to submit a payment schedule which describes what is or is not payable. Most legislation will state that, if there is no payment schedule, then the respondent is ‘liable to pay the amount claimed’. Based on the wording, most small subcontractors will (understandably!) assume that their payment claim will be simply ‘rubber-stamped’. However, what the small subcontractor does not know, is that we adjudicators are told that we cannot merely ‘rubber-stamp’.
There are many examples where an otherwise meritorious payment of claim fails, because of this misunderstanding.
Other jurisdictional problem areas for the small subcontractor are the existence of a contract, proof of service and reference date. The latter proved so ambiguous that the NSW legislature removed it from its SOP Act (Security of Payment).
The result of all this is that the small or medium sized contractor risks falling foul of one or more of these numerous jurisdictional or procedural quirks, if they don’t seek specialist advice. But such advice doesn’t come cheap and just a few hours consultation could quickly run up a bill of over $1,000. Not necessarily viable for small claims of a few thousand dollars. Even for bigger more complex cases, the cost of advice can be material. It is important for claimants not to rely on or simply see this as a way to ’get made whole’.
If you are considering adjudication as an option, we can help you successfully navigate the minefield ahead as cost-effectively as possible.
Equally, another way to view this – if you are managing or owning a business, contract and commercial disputes are almost an inevitability – they are bound to crop up at some point. So, they key is contracting sensibly and shrewdly to account for that possibility.
We love working with clients on proactive, early engagements. We are helping to mitigate specific risks, lower contract / legal / advisory costs and ultimately, improve the profitability of a project.
We work with the senior commercial and contract teams to help steer the approach away from decisions and actions which can be costly later-on in the project. If you’d like to know more about how we’ve helped clients in this way, contact us in confidence on hello@icradvisory.com.