Undoubtedly COVID-19 has had a negative impact on cashflow in the construction industry. Specialist sub-contractors in particular are struggling to get paid by contractors or are resigned to accepting partial payments. The Construction Contracts Act 2013, enacted by ministerial order in April 2016 and applicable to all construction contracts entered into after 25 July 2016, can facilitate a speedy resolution to payment disputes via adjudication with its 28 day turnaround. This is a no brainer for subcontractors to pursue payment claims over lengthy and expensive arbitration and/or court litigation.
Adjudication is a documents only basis i.e. there is rarely if ever an oral hearing (no day in court, no witness testimony etc) so the adjudicator must base their decision on the proofs before them. Therefore it is imperative that the party bringing a payment claim (widely defined) has their paper work in order to bring their claim home successfully. To help subcontractors I set out 10 top tips to prove claims at adjudication below:-
- If there is a variation under the contract, this needs to be priced up based on scope;
- Agree the price and scope before carrying out the Works (difficult in practice when coming under pressure from the contractor);
- Make sure to get all instructions in respect of variations in writing - it’s in the contract!;
- Completed day works sheets must be signed off by the contractor;
- Send weekly progress reports to the contractor;
- Take plenty of photographs and videos from daily/weekly site walks;
- Serve your notices within the correct timeframes;
- Issue the payment claim on time;
- Retain an expert on quantum where the claim is complex, not easily explained and has a high value;
- Ensure the Notice of Intention to Refer to Adjudication sets out a detailed narrative and all the supporting documents you intend to rely on.
Even if you prove your claim, there is a risk that that claim may be more than offset by the inevitable counterclaim where you have little or no proofs to defeat each contra charge raised. Worse still you may end up owing money to the contractor. Here are 10 top tips to disprove counterclaims:-
- It is critical to keep contemporaneous records;
- Keep everything in writing (opt for emails rather than text messages);
- Always respond to emails (a sub-contractor’s silence will be deemed to be acceptance of contractor’s instructions);
- Refute inaccurate minutes of a meeting;
- Offer credible alternative reasons to allegations of defective workmanship;
- Make sure you are given an opportunity to fix defective workmanship as opposed to alternative sub-contractors;
- Retain your own expert to inspect and report where necessary (economies of scale will dictate necessity);
- Have your suppliers test the pricing the contractor is reliant on to avoid over pricing on a project;
- Seek supporting documents from the contractor for the basis of pricing;
- Take issue immediately when a payment is withheld.
In addition to the above steps a prudent sub-contractor would refine and follow a Proofs Methodology in respect of any claim/counter claim to enable them to collate the necessary proofs. It should include the following:
- Contract documents
- Location documents
- Cause of compensation event
- Cause of delay event
- Delay calculation
- Cost calculation
- Proofs checklists
It is advisable to house all the above as well as all contract documents in one central repository to include the facility where all email communications (internally or externally) will be automatically copied to the appropriate project file. This will give a referring party at adjudication a competitive advantage.
David Heatley is a litigation solicitor in Leman Solicitors, a corporate law firm, which specialises in construction disputes. Contact Leman Solicitors on 016393000.