The DTI has attracted some wisdom in the consultation paper in respect of the Construction Act and all that it entails.  There was March 2005 consultation paper proposal, January 2006 Analysis and response, a proposal subject to further consultation into a June 2007 second consultation.  The consultation covers three major issues; 

v  the general terms

v  payment clauses

v  and adjudication

In essence the summary is as follows;

The DTI wish to extend the Act to cover oral and partly oral construction contracts, payment notices should state the amount to be paid, what sums are being withheld and set off.  

Furthermore they take the view that interim certificates issued by someone other than the payer may act as payment notices, particularly in contracts which are not providing certificates, where the payer has not even issued a payment notice and the sum due would be the payee’s claim.  Banning of pay when pay clauses except in the case of an upstream in solvency occurrences.  Banning pay-when-certified clauses (but see Midland Express-way No2) in respect of this.  It may include the right to costs when suspending and remobilising work due to non-payment, but will recognise certain site elements which continue in any event.

Parties to the adjudication should bear their own costs unless by agreement after referring the dispute that the Adjudicator would decide cost liability.  Entitlement of the Adjudicator to payment when he/she resigns due to lack of jurisdiction.  Also they hope to ban clauses that make any interim payment decision conclusive unless the parties agree to make it conclusive after they know the amount.

These are the proposals that will affect change to the Act.  It won’t cause mayhem, it won’t cause major changes but it will if carried through empower the Adjudicators to deal with oral / partly oral contracts.  However please remember in all of this the burden proof is still the same.  I believe they should have brought in a form of discovery and moved the Construction Act forward to shadow what I would call fast track Arbitration giving it more teeth than it has to date – Remiss of them.

Recently I spent hours on a case that had been successful against my Client at Adjudication, but in the scrutiny of Adjudication it tendered to unravel to the detriment of the original winner!  Arbitration is a tougher test but it makes one wonder how many adjudicators can find on somewhat partisan and filtered arguments without substantiation or evidence! 

The payment provisions as in the amendment do cause a little bit more bureaucracy to the larger companies but any company with a good accounting system will have facilities in place to deal with these aspects in any event.  There are anomalies within the whole thing as with any hybrid draft document.  It doesn’t widen the scope of the work at all to include PFI or PPP Contracts, this is a major flaw.  I am glad it doesn’t move to homes as it would completely bog the system down with excessive numbers of adjudications for small works.  There is a method of dealing with them within each of the warranty provider schemes.  

The final response for this latest paper is the 17th September 2007, perhaps it is something that will be dealt with timeously by the parties but lets try to improve the act, but what about a more positive approach?  Why not improve our trading with each other and performance and that would do away with the Act entirely if there was open book accounting for every contract, there would be no reason for queries or disputes and it would resolve many of the queries and difficulties that are occurring in the games that are still being played.

Now role on the Rugby World Cup to see some real disputes… and adjudicati