On 24 January 2025, HHJ Davies, sitting as a Judge of the High Court in the Business and Property Courts in Manchester handed down judgement, remotely, in Placefirst Construction Limited v CAR Construction (North East) Limited [2025] EWHC 100 (TCC).
HHJ Davies reversed an earlier Adjudication decision in a judgement that is essential reading for Employers, Contractors, Contract Administrators and construction lawyers.
The Judgement exposed the ‘rough justice’ that is often dispensed in the forum of Adjudication, which is the focus of this article.
Adjudication is a form of Alternative Disputes Resolution available to parties to qualifying construction contracts, in which an impartial Adjudicator makes an interim binding decision which is subject to final determination by a Court or Arbitrator.
Yes. The right to refer a matter to Adjudication is statutory right in any qualifying construction contract.
The Housing Grants, Construction and Regeneration Act 1996 (‘the Act’), at s.108(1) gives “A party to a construction contract… the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section”.
Adjudication is more common in the construction sector than in any other commercial sector.
According to the 2024 Kings College London report into Construction Adjudication in the United Kingdom (‘2024 KCL report’), the number of Adjudication referrals received by Adjudicator Nominating Bodies (‘ANB’s’) has remained on an upward trend since the introduction of statutory Adjudication in 1998 and, in the year from May 2023 to April 2024, the total number of Adjudication referrals received by ANB’s was 2,264, the highest number on record.
The main advantages of Adjudication include speed and cost.
Most Adjudications are concluded within 28 days of referral. This increased speed has the advantage of reducing project disruption and the prospect of insolvency issues arising.
The reduced cost of Adjudication is often a key reason for parties choosing to Adjudicate rather than to litigate or arbitrate.
The main disadvantages of Adjudication also include speed and costs.
The Adjudication scheme is geared to generate interim binding decisions quickly and, consequently, the justice dispensed in the Adjudication forum is often ‘rough justice’. Inevitably therefore, more complex disputes are not well suited to the Adjudication forum.
There is also an issue in relation to costs recovery, with successful parties in Adjudications often failing to recover the costs of the Adjudication, for which the parties are jointly and severally liable.
The first step in any Adjudication is service of a Notice of Adjudication by the party referring the dispute, followed by service of a Referral Notice setting out the full details of the dispute.
Thereafter, the parties are required to agree on an Adjudicator, including the terms and conditions attached to their appointment, within 7 days. If the qualifying construction contract does not identify an Adjudicator, an application can be made to the relevant ANB to allocate an Adjudicator.
The Responding Party is required to serve a Response to the Referral Notice within 14 days.
The Referring Party has 7 days to reply and the Resonding Party, invariably, is given an opportunity to serve a Rejoinder.
The Adjudicator is required to make an interim binding decision within 28 days of the referral, although this period can be extended by application made by the Adjudicator or by agreement between the parties.
It is possible to enforce and/or to challenge Adjudication decisions by way of application to the Technology and Construction Court (‘TCC’).
According to the 2024 KCL report, since 2011, the TCC has rendered 219 reported judgments in relation to enforcement of Adjudication decisions. The TCC declined to enforce the decisions in full in 43 cases (20%) and partially enforced decisions in a further seven cases (3%). As such, in almost 23% of cases enforcement was denied in whole or in part.
Further, according to the 2024 KCL report, of the 219 reported judgements since 2011, jurisdictional objections were successful in defeating 15% of decisions, followed by natural justice at 10% and other grounds (including fraud) at 7%.
In practice, simple disputes referred to Adjudication can morph into complex disputes more suited to the rigour, standards and timeframes of Litigation or Arbitration.
It is critical to seek out and secure expert legal assistance to provide advice and guidance in construction disputes, including in relation to the most appropriate forum for those disputes.
The perceived advantages of Adjudication can colour judgement and quickly fade as the realities of its ‘rough justice’ are revealed.
If you are an Employer, Contractor, Contract Administrator or Architect contemplating or currently engaged in a construction dispute, we can help. Our experts can advise and guide you through the disputes process in the forum of Adjudication, Arbitration or Litigation.
We recognise that every case is unique. We strive to offer pragmatic, strategic and creative legal solutions and to maximise outcomes for our clients.
If you require assistance and are interested in finding out how we can help, please contact our construction disputes lawyers on paul.odonnell@ilaw.co.uk or 07521 417579.
