The first and most important step in the proceeding is service by the claimant of the notice of adjudication. Adjudication is initiated by a claimant serving written notice of the claimant’s intention to refer a dispute to adjudication on the other party or parties to the construction contract, and the owner of the construction site if a determination of an owner’s liability is sought under section 30(a) of the Construction Contracts Act (the Act) and approval of a charging order is sought under section 30(b) of the Act.
The requirements for a notice of adjudication are set out in section 28(2) of the Act. The requirements are mandatory. There is very little discretion regarding compliance with section 28(2) afforded the adjudicator under section 64, in the event of a failure on the part of the claimant to include the required information.
The notice of adjudication must state:
A notice of adjudication must also set out prominently, in the prescribed form, a statement of the respondent’s rights and obligations in the adjudication and a brief explanation of the process.
Great care should be taken with the preparation of the notice of adjudication because it is from this document that the adjudicator derives his or her jurisdiction in relation to the nature and scope of the dispute that may be determined. In short, if the notice does not include a matter or matters subsequently raised in an adjudication claim, there is simply no jurisdiction for an adjudicator to determine those matters unless the parties agree.
If the claimant wishes to seek approval for the issue of a charging order in respect of the construction site and/or a determination that an owner who is not the respondent is jointly and severally liable to make a payment to the claimant, the claimant must record that in the notice of adjudication and the notice must be served on the owner and every other party.
Notwithstanding the requirement for strict compliance with section 28(2), it is not necessary for a claimant to establish the full details of the quantum of a claim before referring that dispute to adjudication. The relief or remedy sought may be couched in the form of a question, ie what sum is due? or made in the amount of [$amount] or such other sum as the adjudicator may determine. It should be noted that an adjudicator could not determine an amount payable in excess of any stated amount claimed and any determination so made would be invalid for want of jurisdiction and unenforceable. Therefore, a claimant should be careful not to limit the adjudicator’s jurisdiction in a claim brought on the merits under the contract by fixing the amount claimed in any particular sum.
Notice of adjudication in respect of construction contracts entered into or renewed from 1 December 2015
For construction contracts entered into or renewed from 1 December 2015, every notice of adjudication served on a respondent must set out prominently a statement of the respondent’s rights and obligations in the adjudication and a brief explanation of the adjudication process. Please note: the form is different to the form required to be provided to residential occupiers under contracts entered into before 1 December 2015.
Notice of adjudication in respect of construction contracts entered into before 1 December 2015
For construction contracts entered into before 1 December 2015, a notice of adjudication served on a respondent who is a residential occupier as defined in section 5 of the Act must, in addition to the matters set out in section 28(2), set out prominently a statement of the residential occupier’s rights and obligations in the adjudication and a brief explanation of the adjudication process (s62). These matters must be set out in the prescribed form (Form 2) which may be found in Schedule 1 of the Construction Contracts Regulations 2003. It is important to be aware that under section 62(3) of the Act, a notice of adjudication served on a residential occupier that fails to comply with the requirements in section 62(1) (ie fails to set out prominently a statement of the residential occupier’s rights and obligations in the adjudication and a brief explanation of the process), has no effect and, in order to initiate an adjudication, a claimant would need to serve a new notice that complies with these additional requirements.
To make it easy for parties and their advisers, BDT has developed a template for a valid notice of adjudication that can easily be downloaded and completed by a claimant. It is worth noting that many disputes are settled without any intervention whatsoever on the part of BDT simply by service of a notice of adjudication. Service of a notice of adjudication sends a very strong signal to the respondent that the claimant is serious about recovery of money payable under the contract, or damages for breach of contract, or the determination of the parties’ rights and obligations, and unless the matter is resolved immediately, the claimant can and will secure the appointment of an adjudicator which will cost both parties significant time and money, win, lose or draw. Service of the notice of adjudication costs a claimant absolutely nothing and is much more effective in bringing about early resolution of the dispute than a letter, which, if the claimant is lucky, may generate a response, but no money!
TEMPLATE NOTICE OF ADJUDICATION: