a podcast Keith did with Ciaran Brennan of livecosts.com on the Construction Contracts Act 2013
A Podcast Keith did with Ciaran Brennan of Livecosts.com in respect to the impact of the COVID-19 Virus on the industry
As another July passess, the end of the third year of adjudication in Ireland also comes to an end (The Construction Contracts Act 2013 came into force for any construction contract entered into after the 25th July 2016, therefore this date is the end of each yearly cycle). As with previous years, the Chair of the Ministers panel of Adjudicators, Dr. Nael G. Bunni, recently issued his yearly report in respect to the activity through the panel in the year to end July. The report outlines some detail in respect to the use of adjudication through the panel but it does not include any information in respect to any adjudications where the Ministers Panel have not been the appointing body. It can therefore only give a snapshot in respect to where adjudication usage actual sits. So what does it tell us...
Use of Adjudication
The latest report, outlines a circa 355% increase year on year in the number of applications. From a low base of 1 application in Year 1, to 11 in Year two, Year three had 39 applications to the panel for appointment of an adjudicator. A similar 356% increase in actual appointments took place year on year from 0 in year 1, to 9 in year 2 and up to 32 in year 3.
Quantity Surveyors continue to lead the way as the profession most appointed by the panel with 38% of appointments followed closely by Barristers at 21% and Engineers at 18%. Architects, marking the year in which they received their first appointment from the panel are at 15% with solicitors at 6% and a Fellow of the CIArb at 3%. The most common rate charged by adjudicators was between €200 and €250 (46%) with a charge between €300 and €350 per hour next in 35% of cases.
Parties in Dispute
No surprise that Sub contractor's referring against the Main Contractor continues to lead the way in the number of disputes and this relationship is now responsible for 66% of the cases on the panel. Main Contractor's are also using the adjudication process as a resolution tool with 19% of cases referred by them against non Public Body Employers, a further 6% between them and Public Body employers and 3% between them and Sub Contractors. Employers referring against Main Contractors is responsible for a further 6% of cases. There is no reference to a Public Body having used adjudication against a contractor to date. In respect to the outcomes of decisions, the Referring Party were successful on 58% of reported cases with the respondent successful on 27% of cases. 15% of cases had a split decision issued.
Location of Dispute
Dublin continues to have the largest amount of disputes with 62% of cases located in the Capital. Interestingly no other county in Leinster has ever registered a dispute to the Adjudication service. Munster is well represented however with Cork responsible for 9% of cases, Tipperary 6% and Kerry and Waterford with 3% each. May and Galway represent 6% and 3% respectively with 3% of cases noted without a location. Most interesting from the list is the fact that London is noted as the location of a dispute under the Act.
Values and Costs
Disputes for values between €100-500k account for over 40% of cases through the panel followed closely by disputes below €100k at 31%. 47% of cases resulted in a total adjudicator cost of less than €10k with a further 22% between €10k and 20k. 25% of cases had a final adjudicator fee of in excess of €20k over the period with the highest reported fee of between €40-45k.
There has been lots of discussion around why Adjudication has been a slow burner in Ireland. In the main it appears that year on year, the use of adjudication is growing although at a far greater rate that had been expected. It is however noted that many in the industry are still completely unaware of the existence of the Act, the payment provisions and adjudication and ongoing publication of the existence of this piece of legislation will be required. It is also to be acknowledged that the existence of the payment provisions and the opportunity to suspend for non payment under the ACT will also have assisted the resolution of disputes prior to the need for a step into the adjudication process. It will be interesting to see what changes another year might bring in respect to adjudication.
For a full copy of the annual report including copies of the previous years report please follow the link here to the Construction Contracts Adjudication Services Website.
Keith Kelliher is an Accredited Adjudicator, who has represented Main Contractors and Sub-Contractors in payment disputes for over 20 years in the Irish construction industry. Keith has represented numerous parties in the Adjudication process to date in Ireland from referral through to a decision. Contact Keith at firstname.lastname@example.org for any assistance with the requirements of the ACT. This article is a commentary piece and does not constitute nor should it be relied upon as legal or professional advice.
Very much enjoyed my interview today on the topic of Mediation with Gerry Kelly on LMFM radio alongside my colleague Bill Holohan. Many thanks to Gerry for directing us through a great overview of the process.
Shortly after the official start of the collapse of Carillion Plc on 15th January 2018, when the main company and five group companies were placed into liquidation by the company directors, the phone started ringing and questions were being asked by concerned subcontractors about the impact of this move on projects in Ireland. A review of one subcontractors file and the usual gaps that exist have raised some interesting questions about the impact of the now enacted and commenced Construction Contracts Act on any outstanding payments to subcontractors in this type of scenario.
On the 22nd July 2016, the InspiredSpaces Consortium was awarded a Contract by the National Development Finance Agency for the construction of a 5 school PPP bundle. InspiredSpaces is a joint venture (50/50) between Carillion and an investment company called Dutch Infrastructure Fund. InspiredSpaces was originally set up in 2004, as a Carillion joint venture consortium vehicle to carry out collaboration projects across a number of industry sectors. InspiredSpaces is described on its website as a Carillion company but is itself a limited company registered in England and Wales.
Sammon Contracting Limited, a Kildare based contractor, were subsequently appointed by the consortium to facilitate the construction of the schools bundle. What is not clear yet forms an important aspect of consideration from the Acts perspective, is the contractual relationship between InspiredSpaces and Sammon Contracting and if there is any intermediary between the two entities. It has been noted in one article available online that Carillion Construction Limited were contracted by the InspiredSpaces consortium with Sammon Contracting subcontracting from Carillion Construction Limited. This relationship quandary in itself would appear to have an important and interesting ramification under the Construction Contracts Act particularly when it comes to any paid when paid provisions.
Paid When Paid
I have previously written about the ineffective nature of paid when paid clauses in Irish construction contracts arising out of a provision in the Construction Contracts Act under Section 3(5). There are however some exclusions as outlined under Section 3(6). Were a party to a construction contract relies upon the payment of another party who is not a party to the contract and that party has a receiver appointed then the contracting party are entitled to rely upon a paid when paid clause down the supply chain. There is one main requirement in that the reliance upon a paid when paid clause in itself requires that there is a paid when paid clause in the contract between the parties in the first instance. To use the present scenario as an example, for Sammon Contracting to rely upon a paid when paid clause with their subcontractors, InspiredSpaces or Carillion Construction Limited would have to have a receiver appointed and Sammon Contracting would need to have a paid when paid provision within their subcontracts with their subcontractors.
Where further questions arise is in respect to the current legal standing of InspiredSpaces and Carillion Construction Limited. Carillion Construction Limited are listed as one of the, now sixteen, Carillion group companies that were placed into compulsory liquidation with a further company currently placed in voluntary liquidation. In respect to this company, the reliance upon a paid with paid clause in any subcontract would therefore appear to have a basis for effect. InspiredSpaces however is not a company listed as having had a receiver appointed and therefore any paid when paid clause would still appear to be ineffective under the Construction Contracts Act.
Given the origins of the Construction Contracts Act in Ireland, the Carillion collapse has provided the Irish Construction industry with a first real glimpse into the available options and protections that are offered and available under the Act in its truest sense. It has clearly highlighted the necessity and importance for all contractors to have knowledge and sight of those involved in the full contractual chain both above and below their heads as it goes to the heart of their risk and ability to recoup through the payment and adjudication provisions of the Construction Contracts Act.
Keith Kelliher is an Accredited Adjudicator, who has completed the Diploma in Adjudication in University College Dublin, specifically on the Construction Contracts Act 2013, and has represented Main Contractors and Sub-Contractors in payment disputes for over 19 years in the Irish construction industry. Contact Keith at email@example.com for any assistance with the requirements of the ACT. This article is a commentary piece and does not constitute nor should it be relied upon as legal or professional advice.
I have just completed my first foray into the Adjudication process in Ireland.
I, today, managed to settle a dispute for a client, a main contractor with their client. We had commenced the adjudication process under the Construction Contracts Act and for the first time in Ireland, we applied to and had an adjudicator appointed from the Minister's panel.
The Responding party had buried their head in the sand and refused to engage on the dispute for over 10 months. Adjudication provided the necessary tool to bring the other side to the table and to find a resolution. The duration of time from my application to the minister's panel for an adjudicator appointment to the actual receipt of disputed funds into my client's bank account was 15 days in total. A very welcome change from the past in this regard.
The system is far from perfect but it certainly worked in this instance as the alternative litigation route (no arbitration agreement) would have taken many years and involved substantial legal costs. With adjudication I was in a position to manage the entire process directly for my Client and produce all the necessary notices, reports and submissions that were required. The speed of the process provided a real benefit to the parties in terms of dealing with issues and simply finding a way of moving on. I look forward to assisting more clients through this process (and of course where possible in avoiding the necessity to go down this route)
Please do not hesitate to contact for further information or for assistance with getting disputed payments on construction contracts dealt with.
My next seminar on the Payment Process under the Act is on the 8th December in the Red Cow hotel.
Full details on the half day seminar available by clicking the below.....
The importance of the need to be in a position to confirm the existance of a Contract between parties came to the fore in the recent case of Dacy Building Services Ltd v IDM Properties LLP  EWHC 3007 (TCC). The case was for summary judgment to enforce the decision of an adjudicator.
Kelliher & Associates were recently involved as quantity surveyors in providing an expert opinion in respect to the cost appraisal of works carried out on a domestic property project under which a dispute had arisen between the contractor and their employers.
Kelliher & Associates experts in the field of Dispute Resolution and provide this information for education and reference in the field.