It is generally a good idea not to annoy the mind you’re trying to persuade
Introduction
Adjudication is conducted on the papers; the quality of the submission of those papers is critical.
Without extension by agreement, or by the adjudicator in those limited instances provided for in the Act, the procedure is brutal, with a binding determination potentially being issued in a period as short as 8 working days after receipt of the notice of adjudication; though 40 working days is closer to the norm.
If a durable determination is to be made, ie one which properly covers the issues and is accepted by the parties as something they can live with, then it is important that the dispute is properly defined and each party presents its case clearly and concisely. That is consistent with the purpose of “speedy resolution” and the truncated timeframes for adjudication in the Act.
All too often, the approach taken by counsel is to raise every potential argument, in the hope that one will capture the adjudicator’s attention; to submit every conceivable document in support, regardless of relevance; and to raise every imaginable allegation of bad faith and poor behaviour by the other party in the expectation that it will gain the sympathy of the adjudicator.
It doesn’t.
There is no evidential hearing; no provision for sworn testimony; and no opportunity for cross-examination of witnesses. The adjudicator must determine the dispute based solely on the documentation provided by the parties and, when they are held, on-site inspections (section 45). It is in the parties’ best interests, therefore, to present the best case they can in these documents.
Procedure
The adjudication claim and response, and related documents, are the parties’ first and only real opportunities to present their respective cases in detail. As previously mentioned, the claim is limited to the dispute raised in the notice of adjudication.
The reply is, and can only be, an opportunity to present a defence to the claim, as defined in the notice. There is no jurisdiction to raise a counterclaim. That must be raised by the respondent in a new notice of adjudication, defining a new dispute.
The dispute can be extended by agreement between the parties and the related adjudication proceedings can be determined by the adjudicator at the same time (section 40). This is a mechanism which can be used to determine related disputes, for example a claim by a contractor, a counter-claim by the owner, and a third party claim against the engineer, by the same adjudicator in the same time frame. Considerable care needs to be taken in such arrangements, however; but it does give the adjudicator the ability to consider evidence from related proceedings ensuring that the entire dispute gets properly considered, with a consistent outcome.
Having issued the notice of adjudication (see the second article in this series) and appointed the adjudicator (see the third article in this series), the claimant must, within 5 working days of that appointment, refer the dispute to the adjudicator with the adjudication claim(section 36). That 5 working day time period cannot be extended.
The respondent then has 5 working days to issue a response (section 37). That period can be extended by agreement between the parties or, if the respondent applies on time, for such further period as the adjudicator considers necessary having regard to the size and complexity of the claim and if the adjudication claim has been served with “undue haste”.
The claimant then has a further 5 working days to reply to the response (section 37A). There is no provision for extension of this time period. The adjudicator may then allow the respondent a further 2 working days to issue a rejoinder, responding to any new material raised in the reply.
In each case, the adjudication claim, response, reply and rejoinder must be served on the adjudicator and the other party. The adjudicator then has 20 working days to determine the dispute from the expiry of the period within which the response may be served (section 46). This time period may be extended by agreement with the claimant and respondent, or for a further 10 working days on the adjudicator’s own initiative.
The adjudicator must not determine the dispute until the period for issuing a response has expired, and may proceed to do so if no response is received.
It does happen from time to time that a respondent is of the view that a dispute is better dealt with in arbitration (and reserves its rights to do so), or counsel serves a “placeholder” response, to meet the time frames above, hoping to file a more complete response or accompanying documents at a later date. In each case, it is likely that the adjudicator will proceed to determine the dispute without further input, and the respondent will be exposed to a binding, adverse determination which can only be reversed through more lengthy and expensive arbitration.
Adjudication Claim
The adjudication claim is effectively the claimant’s first and only opportunity to present its case.
If no timely response is submitted, the adjudicator will determine the dispute based on the adjudication claim, and any further investigations which the adjudicator may carry out (section 42). The claim should therefore identify the central issue, identify the relevant facts, apply the relevant law and argue the claimant’s position with clarity and economy.
Prior to the 2015 amendments to the Act, claimants had no clear right of reply to the response. That gave rise to the unfortunate position that claimants had to set out their case, and respond to what they thought the respondent would say in defence of the claim. Without any assurance that the adjudicator would seek further submissions, giving the claimant the opportunity to reply, this became clumsy and unworkable. For contracts entered into from 1 December 2015 (section 11A), the claimant has a right of reply to issues raised in the response and the respondent a right to a rejoinder to anything raised in the reply (section 37A).
The formal requirements for the adjudication claim are limited (section 36) – the claim must specify the nature or grounds of the dispute and may, to the extent it remains relevant, be accompanied by the notice of adjudication and any other documents. The “other documents” typically comprise:
· witness statements, outlining the background and history of the dispute and introducing and referencing supporting documents
· a copy of the construction contract, exchanges of emails and contract correspondence, and any other relevant supporting documentation
· expert reports
· cases, extracts from legal authorities and any other articles or commentary relied upon
The adjudication claim itself summarises the claimant’s case.
The most effective claims take the following format (in summary):
· Executive Summary – identifying the parties, the contract, the project, the dispute, the issue of the notice of adjudication, the core of the dispute, the positions of the parties and the relief sought
· Background – the Act applies only to contracts for construction work as defined (section 6), and this needs to be confirmed; the contract needs to be summarised; and the relevant sections identified; the factual background set out and the dispute discussed in detail
· Issues – the core issues which need to be addressed to determine the dispute, then each analysed by reference to the witness evidence and the relevant law
· Relief sought – the claim then summarised and the relief sought outlined and quantified
Hyper-links can be used throughout the adjudication claim to the supporting documents, to make the submission and each argument easier to follow.
Where costs and interest are sought, each must also be justified and quantified. It should be noted that, unlike arbitration and litigation in court, there is no express provision in the Act for awarding interest. Any claim for interest must be justified either in terms of the contract or on common law principles as part of the claim.
Party costs arising from the adjudication and a departure from equal sharing of the adjudicator’s costs are available, but only in exceptional circumstances (sections 56 & 57).
Response
The response similarly may be accompanied by relevant documentation (section 37), but must be strictly in response to the adjudication claim. It is not an opportunity to raise a counterclaim; it must be confined to answering the issues raised in the claim, including abatement.
In terms of format and content, the same comments apply as made above in relation to the claim, with the addition of an initial section on jurisdictional challenges that may arise.
There can be a tendency for counsel to follow the High Court procedure of citing paragraph numbers and responding to each. I would refer readers to the quote at the head of this article. Simply following a formulaic structure of referring to a paragraph and saying, in the worst cases, “accepted”, “denied” or “not so far as the respondent is aware” is unhelpful. Worse, it is very frustrating for adjudicators; as is endless complaints about what a ratbag the other party is, and how groundless the claim must be!
Hyperbole and hubris should be avoided at all costs.
The best responses set out clearly the respondent’s position, explain why the facts are not the entire picture, identify the relevant issues and explain why the claim is wrong.
Reply and Rejoinder
Both the reply and the rejoinder are opportunities to correct any statements made in the response or the reply, as appropriate, and to summarise the parties’ position. It is not an opportunity to raise new argument or to present new factual information, which then needs to be addressed further.
In some circumstances, the adjudicator may seek further information or submissions, in which case the other party will be given the opportunity to comment. Such submissions and comment should be limited to the questions asked by the adjudicator.
Conclusion
All submissions, the adjudication claim, response, reply and rejoinder, must be prepared with full appreciation of the aggressive time periods set out in the Act, and in the knowledge that the adjudicator has to determine the dispute within a very short period, based on limited information. That is inevitably what is needed to meet the requirement for “speedy resolution” of disputes.
To achieve that, the core issues need to be defined and all submissions should be focused on the matters in dispute. The adjudicator will not thank either party for lengthy, rambling and ill-conceived submissions full of unsupported and irrelevant allegations and poorly collated documentation. It is this documentation which the adjudicator will use to determine the dispute. The best chance of success is to write the submissions as if they will form the basis for the determination.
Next week, in the final instalment, I will cover drafting dealing with evidence, witnesses and experts.