The focus of this series has been to make the most of the adjudication process, in the context of the fast-track procedure, and the binding, but not final, nature of determinations – part of the pay-now-argue-later approach of the Act.
For parties and counsel, the I have suggested:
· identify the disagreement early, and use adjudication to corral the dispute before it infects the project as a whole
· limit the issues in dispute to the core disagreement
· agree on the most appropriate adjudicator for the dispute
· keep the submissions focused on the issues in dispute, and keep them concise
The adjudicator then must determine the dispute within what can be a very tight timeframe. The adjudicator’s jurisdiction is limited to the matters referred to him or her, any ancillary matters and any extensions to those matters agreed by the parties (section 38). He or she is to have regard to the Act, the construction contract, the submissions of the parties, the reports of experts, site inspections and any other matters he or she may consider to be relevant (section 45).
There is no provision for sworn testimony, hearings or cross-examination, and the traditional rules of evidence, including the Evidence Act 2006, do not apply. The adjudicator must, however, comply with the principles of natural justice (section 41).
Natural justice is, at its core, an obligation to act fairly. In the context of the strict procedural requirements of adjudication, it is largely a question of giving the parties the opportunity to present their cases and to address any issue which may be relevant to determining the dispute. In practical terms, the adjudicator must not communicate with one party to the exclusion of another; all submissions and communications must be copied to all parties; each party must be given the opportunity to comment on the submissions of the other; and if there is an issue which the adjudicator considers relevant, which has not been raised by the parties, then they must be given the opportunity to comment. The adjudicator cannot “go on a frolic of their own”.
The presentation of the parties’ evidence is then critical.
Construction projects are unique for the quantity of documentation generated, its complexity and, largely due to the extensive use of email, for the fact that all parties tend to have copies of every communication and document. This can lead to adjudicators being deluged in documents of varying relevance, from the invitation to tender, notices to tenderers, minutes of tender discussions, the tenders themselves, the construction contract (including lists of tender qualifications and the letter of acceptance), payment claims and schedules, notices to contractor, notices to engineer, drawings, specifications, minutes of project control group meetings, variation claims and instructions, extensions of time claims, programmes and communications with the engineer and owner; even when disclosed electronically, the extent of the documentation can be overwhelming, if it is not properly reviewed for relevance.
The traditional means of disclosure is through the witness statement, either by attachment or by reference to the document bundle.
In preparing witness statements, the first consideration is the relevance of the witness. A statement from a director/shareholder of the contractor, to the effect that his is a small locally owned company employing people from his community with families to feed, whereas the owner is part of a substantial multi-national corporation, will carry little weight. Whereas, the project manager, commercial manager and engineer with direct involvement in the project and familiar with the issues in dispute will be crucial.
The witness statement should then follow a few simple rules:
· identify who the person is, and what their role is
· preferably, it should be written in the witnesses own voice, rather than carefully crafted by counsel
· if the person has no direct knowledge of matters set out in the witness statement, he or she should say so
· the statement should be in narrative form, chronologically describing the history of the project, so far as relevant, and the genesis of the dispute
· in each case the statement should cross-refer (by hyperlink, if possible) to the relevant document
· all documents relevant to the dispute should be disclosed, rather than a careful selection which advances the party’s case
It is helpful if the witness statement sticks to the facts, and refrains from hyperbole and advocacy (the latter should be left to the adjudication claim). Witness statements do not need to be in the form of sworn affidavits.
When weighing the evidence presented, the adjudicator will typically place more weight on the written record, as it is typically written contemporaneously with development of the dispute. The witness statement does, however, provide context and introduce the documentary record.
Discovery is generally not an issue which comes up in adjudication, as the parties are aware that they all have the same record of contract communications, and they will have disclosed all the documentation upon which they rely, whether with the adjudication claim or the response. In those situations where the parties may not have disclosed information which the adjudicator considers relevant, the adjudicator has the power to compel a party to disclose further documentation (section 42). Such a power would typically be accompanied by a request for further submissions on the point, with an opportunity to comment.
Evidence given in an adjudication is not covered by any privilege, and may be disclosed in subsequent proceedings, whether in arbitration or in court, subject to the general rule of confidentiality (section 68).
There is frequently a need, in construction disputes, to refer to experts; mostly for delay analysis, valuation of variations and cost claims.
In the normal course of events, there is limited time to challenge the findings of experts, no opportunity to cross-examine the expert on the report or for “hot-tubbing” or other techniques used in arbitration; the adjudicator has to simply weigh the evidence provided by competing experts. Typically, the expert will state that they have read and will comply with the Code of Conduct for Expert Witnesses, set out in Schedule 4 to the High Court Rules 2006; and then show that they have not understood them. While the High Court Rules do not apply to adjudications, the duty in paragraph 1 of the Code “to assist the court impartially on relevant matters within the expert’s area of expertise” is helpful.
Sadly, few experts confine themselves to areas within their expertise, nor do they limit themselves to the questions asked of them, concentrating instead on advocating for the party which appointed them. To have any real weight, the parties should disclose the expert’s brief, the information provided and the questions asked of them. It may also be helpful for the expert to disclose how many times and how recently they have been engaged by that party to provide similar or related services. It is also incumbent on counsel to review the expert’s report to ensure that it truly does comply with the principles outlined in the Code.
An alternative is for the adjudicator to appoint his or her own expert (section 42(1)(e)). In such a case, the Act requires the adjudicator to first notify the parties before any appointment is made. In practical terms:
· where the need for expert evidence becomes apparent, the adjudicator should notify the parties of the intention to appoint an expert
· that notification should disclose the proposed expert, the question put to him or her and the information provided for the expert to consider
· all communication with the expert should be through the adjudicator, and not through the parties
· the expert’s costs must be agreed, as far as possible, in advance and accepted by the parties
- the expert’s report should be provided to the parties, and they or their own experts should be given the opportunity to comment on that report
Experts can be vital to adjudicators to enable them to draw properly informed conclusions. Experts must understand, however, their role is to assist the adjudicator and not to advocate for the party appointing them, or in the case of adjudicator appointed experts, to determine the dispute themselves.
The Act provides for the adjudicator to call a “conference” of the parties (section 42(1)(f)); the use of the term “conference” as opposed to “hearing”, with the implication of hearing evidence, cross-examination and submissions, carries with it different expectations. Without the procedural rules, and requirements for sworn testimony, that go with hearings, conferences must be approached with considerable caution; particularly as counsel will find it difficult to avoid the habits of court proceedings.
In most cases, conferences should be approached on the basis that it is an opportunity for the adjudicator to discuss the evidence, the submissions and any other relevant issues with the parties. As with requests for further documentation, it would be unusual for a conference not to be followed by a request for further submissions and comment to clarify what was discussed and to ensure that it is properly on the record.
As with conferences, site inspections are unusual in adjudication; not least due to time constraints. A number of adjudications have been tripped up over the years as a result of site inspections carried out under misapprehension.
A site inspection, at its most basic, is to allow the adjudicator to view the site, clarify the evidence and put the issues into context. They are not an opportunity to make further submissions or to present facts not already covered in the adjudication claim or response; more critically, they are not an opportunity for the adjudicator to hold an informal hearing or to draw his or own conclusions without hearing from all parties.
Site inspections should follow basic rules:
· those attending (including counsel) should be agreed and limited to those needed for access and to answer questions
· what is to be seen is to be discussed and agreed
· the adjudicator should be accompanied by representatives of all parties at all times
· any questions or clarifications should be addressed to all representatives
It is helpful, following any site inspection, for the adjudicator to record what was seen and any conclusions drawn from the inspection, if possible. Again, in the interests of natural justice, if the adjudicator observes something or is to draw certain conclusions, further submissions must be sought if those issues have not already been covered.
All parties, and the adjudicator, should have in front of mind, that challenges of lack of procedural fairness and failure of natural justice most commonly arise out of conferences and site visits.
Adjudication is by definition a prompt, and potentially very effective, means of resolving contract disputes. In this series, I have identified a number of ways in which the use of adjudication can be improved:
· identifying areas of disagreement early, before they escalate, and if the positions of the parties are intractable, referring the discrete issue to adjudication for determination
· keeping the issue limited to the dispute to reduce the risk of infecting other project relationships
· selecting an adjudicator best suited to determine the dispute by agreement
· providing clear, concise and focused submissions to assist the adjudicator to understand the issues and to accept your position
· keeping witness statements to the point and relevant
That concludes this series. Feel free to share your experiences and to make comments on any of these articles, and contacting me directly if you wish.