Construction Adjudication
As a construction business, you may encounter disputes with clients, contractors, or other companies. You may be able to settle these conflicts by negotiation. However, there may be instances where that is not possible and you will need a dispute resolution process to help you resolve your issue. One such process is adjudication, a fundamental right everyone has because of the Construction Contracts Act 2002.
What is Adjudication
Adjudication is an alternative dispute resolution process commonly used in the construction industry to settle disputes that arise between parties involved in construction projects, such as clients, contractors, or other businesses. It’s a way to resolve conflicts quickly and cost-effectively without going through lengthy court procedures. The process is governed by the Construction Contracts Act 2002, which provides streamlined procedures for resolving payment claims and matters concerning rights and obligations of the parties.
During adjudication, a neutral third party, known as an adjudicator, considers both sides of the dispute and makes a decision, which is legally binding. Usually, the adjudicator bases his or her decision on the written submissions only, including witness statements provided in support of each party’s position. However, an adjudicator is free to conduct the adjudication how he or she considers fit, but, commonly in New Zealand, because of the lack of specialisation of lawyers, who tend to be panel adjudicators, witnesses are not cross examined, technicalities are not understood, thus adjudication decisions can be a bit pot luck.
The Construction Disputes Resolution Board’s panel of Adjudicators are all seasoned construction professionals, many of whom are dual qualified in law and quantity surveying, engineering, architecture or project management. This means that the person appointed to determine your dispute will have in depth and specialist knowledge of the subject matter. Our adjudicators also acknowledge that the process should be confined to the timescales contemplated by the Construction Act 2002, therefore, keeping costs down. Too often, parties have been subjected to lengthy periods in which to provide the response, which in turn tends to draw out the date for the determination, at the same time increasing the costs to the parties exponentially. Our adjudicators also want to make the right decision and in order to achieve that, may call a conference to discuss any of the material and cross examine witnesses.
The advantages of adjudication include its speed, low cost compared to formal litigation, confidentiality of proceedings, and the binding nature of the decision unless appealed through arbitration or litigation. Additionally, adjudication offers flexibility, allowing parties to agree to extend time limits for particularly complex or volumous claims only, or grant additional powers to the adjudicator for more in-depth analysis if needed.
Explore the adjudication process in our comprehensive guide below, covering each step from serving the notice of adjudication to reaching a determination. Dive into the details to better understand how adjudication works and how it can help resolve disputes efficiently.
Step by Step guide
Step 1: Serve the Adjudication Notice
When you’ve hit a roadblock in a construction project and need to resolve a dispute swiftly, the Adjudication Notice is your starting point. Section 24 of the Construction Contracts Act 2002 empowers you to kickstart the resolution process effectively.
The notice of adjudication must contain specific information, as outlined in section 28(2) of the Construction Contracts Act. This includes details such as the date of the notice, a description of the dispute, where and when it arose, the relief sought, and information about the construction contract. It must also be issued to the Respondent and any Title Owner if a charging order is required and must be issued with a Form 2.
Careful attention must be paid to preparing the notice of adjudication, as it establishes the adjudicator’s jurisdiction over the dispute. Failure to include necessary information may limit the scope of the adjudicator’s decision.
Step 2: Apply for Adjudicator Nomination
Within 2 to 5 working days of serving the Adjudication Notice, enlist the aid of the Construction Dispute Resolution Board (DRB) to nominate an adjudicator, as outlined in Section 25 of the Act. Their wealth of experience ensures you’re on the right path to resolution.
This step allows you to take proactive measures to ensure a fair and impartial adjudication process. By engaging the Construction DRB, which is an impartial body tasked with facilitating dispute resolution within the construction industry, you can benefit from our expertise and guidance in selecting an adjudicator who possesses the requisite qualifications and experience to effectively adjudicate your dispute.
Applying for adjudicator nomination within the specified timeframe demonstrates your proactive approach to resolving the dispute and underscores your commitment to ensuring a fair and equitable resolution for all parties involved.
Step 3: DRB Nomination
Applying for adjudicator nomination is a key step in resolving your dispute through adjudication, showing your commitment to a fair process.
Upon receiving your request, the Construction Dispute Resolution Board (DRB) will assess your case within 2 working days, and swiftly nominate a suitable adjudicator with the necessary expertise and impartiality to handle your case effectively.
All parties will be promptly informed of the adjudicator selection, ensuring transparency. The DRB will also specify the required security deposit for the adjudication process.
Step 4: Security Deposit
Maintaining financial equilibrium is essential. Both parties contribute equally to a security deposit, ensuring the smooth operation of the adjudication process without financial strain.
This deposit ensures financial commitment to the adjudication process and helps cover the adjudicator’s expenses. Clear instructions will be provided regarding payment methods and deadlines to ensure smooth proceedings.
Step 5: Serve the Claim
Within 5 working days of the adjudicator’s acknowledgment of the security deposit, it’s time to articulate your case. Section 35 dictates the timely delivery of your claim to both the respondent and the adjudicator, laying the groundwork for informed deliberations.
This timeframe is legally binding and cannot be extended, highlighting the importance of prompt action in initiating the adjudication process. As this process cannot be extended, it is recommended that your adjudication claim is ready to be served by the time you request nomination of an adjudicator. This will enable you to put your best foot forward, rather than incur the stress of trying to get all the evidence written up during the last few days before you have to serve your claim.
Once the claim is served, the adjudicator will review the submitted documents and commence the adjudication proceedings. This marks the official start of the adjudication process and sets the stage for the parties to present their respective arguments and evidence in support of their positions.
Step 6: Respondent's Response
After receiving the claim, the respondent has 5 working days, in accordance with Section 37, to present their response. This strategic move shapes the trajectory of the adjudication process.
The respondent is given the opportunity to respond to the allegations and arguments put forward. This response should address the points raised in the claim, provide any counterarguments or defences, and present any relevant evidence or documentation to support their position.
In some cases, the respondent may request an extension of the deadline for submitting their response, particularly if the issues are complex or volumous. The adjudicator will consider any submissions made by the respondent, together with any of the claimant, in relation to the granting of any such extension. The adjudicator will consider any potential breach of natural justice other implications, such as cash flow of the claimant, if an extension is or is not granted. Always being cognisant of the fact that the Act was enacted to provide a speedy determination of disputes to aid cashflow on a ‘pay now, argue later’ basis.
Step 7: Claimant's Reply
Within 5 working days of receiving the respondent’s response, Section 37A empowers you to deliver a compelling reply, reinforcing your position and addressing any emerging concerns. This reply must be focused and timely, within adhering to the specified deadline. Any extensions require mutual agreement between the parties. The adjudicator does not have the jurisdiction to extend time for service of the Reply. It is also important to note that any evidence and submissions must be directly in reply to the respondents. This is not a chance to better the claim by introducing new evidence. The adjudicator has the authority to refuse to consider any new evidence under.
Step 8: Respondent's Rejoinder
Within 2 working days of receiving the claimant’s reply under Section 37A, the adjudicator may allow the respondent to submit a rejoinder to address any new points or counter-arguments. This stage is time-sensitive, and extensions are not permitted. The rejoinder must be focused and concise, ensuring fairness and efficiency in the adjudication process.
Step 9: Adjudicator's Determination
Finally, within 20 working days of receiving the response, extendable by 10 days as permitted by Section 46(2), the adjudicator delivers their determination. This definitive ruling marks the conclusion of the adjudication process, guiding all parties towards resolution.
The determination is binding on the parties until a decision has been made by an Arbitrator or Judge, reversing the decision. This is because the Act was enacted to provide certainty of a decision on a pay now argue basis.
Contact Us
Email:
resolution@constructiondrb.com
Address:
Auckland 1010
New Zealand