A little later than usual and after the end of the fifth year of adjudication in Ireland has come and gone (The Construction Contracts Act 2013 came into force for any construction contract entered into after the 25th of July 2016, therefore this date is the end of each yearly cycle) we have today, received the report in respect to the year that ended in July 2021. The Chair of the Ministers panel of Adjudicators, Mr. Bernard Gogarty, who replaced Dr. Nael G. Bunni, has today issued the 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, surprisingly outlines a circa 6% drop year on year in the number of applications to the panel. From a low base of one application in Year 1, to 11 in Year two, Year three had 39, Year 4 had 54 and now year 5 detailed 51 applications to the panel for appointment of an adjudicator. A larger 20% drop-in actual appointments took place year on year from 0 in year 1, to 9 in year 2, to 32 in year 3, 46 in year 4 and down to 37 in year 5. For the first time, the report outlines that there were ten non-compliant applications. Nothing is noted in the report as to who or what has decided that an application is non-compliant other than the report notes that they were deemed to be non-compliant with the legislation or the application requirements set out in the ‘Code of Practice Governing the Conduct of Adjudications.’

​Adjudicators
Architects have surged up the leaderboard in Year 5 as the profession with the highest number of appointments with 33% (16) of all appointments with Quantity Surveyors getting knocked off the top spot matching their 31% (15) of appointments from year 4, followed by Barristers at 19% (9), Engineers at 10% (5) and Fellows of the CIArb at 6% (3). There were no appointments made to solicitors from the panel in the year. The most common rate charged by adjudicators is maintained at the year 4 level between €250 and €300 (36%) with a charge between €200 and €250 per hour next in 26% of cases. There was no case recorded this year with an adjudicator charging over €450 per hour, a reduction is the highest value by €50 per hour since Year 4.

​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 was responsible for 40% of the cases on the panel. Main Contractors are also continuing to use the adjudication process as a resolution tool with 25% of cases referred by them against non-Public Body Employers and a further 13% between them and Public Body employers. There is a record of two cases (4%) been referred by Main Contractors against Sub contractors through the panel this year. Employers referring against Main Contractors was not responsible for any cases in year 5. For the first time, since the report began, professional consultants are now using adjudication against their employers with four cases now accounting for 8% of cases referred and subcontractors referring against other subcontractors was responsible for some 5 cases or 10% of cases referred. There continues to be 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 50% of reported cases with the respondent successful on 15% of cases. 35% of cases had a split decision issued. 

​Location of Dispute
Dublin continues to have the largest number of disputes with 58% of cases located in the Capital. For the first time since its introduction, there are now recorded cases in Carlow, Clare, Kilkenny, Longford, Louth, and Meath. Munster is headed up by Cork who are responsible for 8% of cases and Tipperary with 6%. There were only two cases west of the Shannon which means the province has only had two cases in 2 years. In Ulster, Cavan was the only county to have a case. Kildare and Laois with 2 cases each round off the counties with cases. Only Donegal, Leitrim, Sligo, Roscommon, Westmeath and Offaly have yet to record a case on the system in 5 years. 

​Values and Costs
In year 5, following on from a similar situation in year 4, a value between €100-500k is the most common value awarded in 23% of cases following closely by nil and €50k to €100k each at 18%. There highest value recorded are three cases where the award was between €1 - €5 million.
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48% of cases resulted in a total adjudicator cost of less than €10k with a further 20% between €10k and 20k. 32% of cases had a final adjudicator fee of more than €20k over the period with the highest reported fee of between €65-70k.

Conclusion
It is surprising to find a fall off in the number of applications to the panel in Year 5. Year 5 was the end of the first cycle of the panel with a revised Adjudication Panel of 35 persons appointed in the summer. The report highlights some interesting developments, most notably the rise in professionals seeking to utilize adjudication to resolve disputes with their clients. In a year that also delivered the first court cases on the Construction Contracts Act, it will be interesting to see what year 6 brings and to see if we have peaked at our application and appointment level or if the COVID and other factors impacted the growth in the use of the process during the period.

For a full copy of the annual report including copies of the previous year’s 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 [email protected] 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.

An issue arose today that I have not come across since the early days of the Construction Contracts Act 2013 and I feel it works as a timely reminder of the sometimes unnecessary black and white view that our system undertakes.

A Notice of Intention for an outstanding sum due and owing to a client was issued to the Responding Party. The sum due and owing was based on a payment process in a written term of agreement whereby a sub-contractor would issue a payment application to a main contractor. The main contractor would revert with a payment certificate for an agreed amount, to which the sub-contractor would issue an invoice and payment would subsequently be made.

The sub-contractor issued four such payment applications, received four such payment certificates and issued four such invoices but only one of the four payments was subsequently made. No dispute existed in respect to the payments and a notice of intention was issued to the main contractor for non-payment of the outstanding sum of the three payment certificates.

The parties failed to agree on an adjudicator and an application was made to the Ministers Panel of Adjudicators under Section 6 of the Act.

The Construction Contracts Adjudication Service on reviewing the application, rejected same on the basis that it contained in affect, 3 separate individual disputes for payment arising under the same construction contract and it therefore required 3 individual notices of intention to be issued to comply with section 2 of the Code of Practice Governing the Conduct of Adjudications. The service, following a notification by telephone to explain the issue, therefore rejected the application and closed the case.

The options available are:

(1) to collate the claims into a single payment claim notice for payment on a cumulative basis, with a deduction shown only for the payment received and submit same in accordance with the relevant Payment Claim Date under the contract and awaiting the run through of the cycle before, in the assumed absence of payment, issuing a Notice of Intention for the full amount again, or

(2) issuing three separate notices of Intention for the three separate disputed amounts and again in the assumed absence of payment, following on with three applications for appointment of adjudicators for the three references. It is assumed, but not guaranteed, that the same Adjudicator would be appointed on the three cases, but they would still require three sets of referral documents, should the claims proceed.

The issue brought home the reality and necessity of claiming for all works carried out under a construction contract on a cumulative basis with deduction from the value claimed, only made for payments having been received into your account.

In that way, unnecessary time, paperwork and cost will not be lost in attempting to recoup your entitlement.

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 20 years in the Irish construction industry. Contact Keith at [email protected] 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.