SEVENTH COMPANY SEMINAR ON ADJUDICATION (ONLINE)
On Tuesday 1st July2025, 6.00 pm – 7.30 pm, experienced and aspiring adjudicator Liverymen and Freemen of The Worhipful Company of Arbitrators attended this lively zoom discussion of some difficult issues which can arise in Adjudication under the Housing Grants, Construction and Regeneration Act 1996 (As Amended).
Presenters: Past Master Matt Bastone, Senior Warden Matt Molloy & Liveryman Philip Fidler
MATTHEW BASTONE DipArb FRICS FCIArb
Past Master of our Worshipful Company (2016-2017), is a Chartered Quantity Surveyor with extensive experience in commercial management and dispute resolution. Having worked at the highest level in the construction industry, both in the UK and overseas, he moved to set up in private practice. He was awarded the Robert Jardine Brown prize upon completion of the CEM Post Graduate Diploma in Arbitration in 1998, and now has long experience and many appointments as a practising Arbitrator and Adjudicator, serving on various panels including those of RICS, CIArb, RIBA and CEDR.
PHILIP FIDLER FRICS FCIArb C.Arb.
who is a Quantity Surveyor, Arbitrator and Adjudicator, has been involved in construction activities since 1966, as an Arbitrator since 1988 and Adjudicator since 1999, having had roughly 300 appointments. He is a keen proponent of the Worshipful Company of Arbitrators’ Mentorship Scheme, and an occasional lecturer and author of articles on construction and ADR matters. A quantum expert assisting the Court on about 30 occasions between 1985 and 2016, he has been a contributor since 2009 to the Chartered Institute of Arbitrators’ and Adjudication Society’s various Guidelines on Adjudication. He is an Arbitrator Member of the Society of Construction Arbitrators and has served two terms as a Court Assistant of the Worshipful Company of Arbitrators.
MATT MOLLOY FRICS FCIArb C.Arb.
Matthew is a highly experienced dispute resolver, appointed in over 900 construction and engineering disputes as either adjudicator, arbitrator, mediator, expert determiner, Conflict or Dispute Avoidance Panel/Board member. These disputes have concerned high-profile UK and international projects in sectors such as education, private and public housing, offices, hotels, leisure, sports stadia, infrastructure, utilities and energy. Matthew is a Chartered Arbitrator, Chartered Quantity Surveyor, Chartered Builder, has been called to the Bar and is the current Chair of the CIC ADR Management Board. Matthew is a part time PhD Student and Teaching Fellow at Queen Mary University of London where he is undertaking research into international law and arbitration. In 2024, he co-authored his first book, Adjudicating Construction and Engineering Disputes – published by LPP. Matthew is the current Senior Warden of the Worshipful Company of Arbitrators.
QUESTIONS
These were the difficult questions addressed:
- Advice to a Disputant by the Adjudicator
You publish a Decision in which the Referrer is substantially successful but has not paid your fee in the first instance as required by your Terms & Conditions. The Defender asserts wrongly that the Decision is unenforceable and the Referrer requests your advice.
Q: What do you do?
Note: Quite often the Defender subsequently pays your fee in full including any interest for late payment.
- Interest
The Parties’ agreement for a construction contract provides that late payment by one to the other will attract simple interest at the rate of 2% per annum above the Bank of England Base Rate, accompanied by the phrase: ‘and the Parties agree that the said rate is a substantial remedy’.
The payee successfully claims payment in an adjudication before you and requests interest in accordance with the Late Payment of Commercial Debts (Interest) Act
1998, as amended [“the 1998 Act”].
Q1: As Adjudicator do you award interest in accordance with the1998 Act or the Agreement.
Q2: Extract from Statutory Instrument 2002 No.1675 The Late Payment of
Commercial Debts (Rate of Interest) (No.3) Order 2002 [“SI 1675”]
Rate of statutory interest
- The rate of interest for the purposes of the Late Payment of Commercial Debts
(Interest) Act 1998 shall be 8 per cent per annum over the official dealing rate [“the
Base Rate”] in force on the 30thJune (in respect of interest which starts to run between 1st July and 31st December) or the 31st December (in respect of interest which starts to run between 1st January and 30th June) immediately before the day on which statutory interest starts to run.
The Explanatory Note in SI 1675 (This not is not part of the Order) states:
For the purpose of this Order the official dealing rate to be used is that in force on 30th June or 31st December in any one year. This rate will apply as the official dealing rate for the following six month period, namely 1st July to 31st December or 1st January to 30thJune respectively.
Once interest commences under the 1998 Act does it alter with changes in the Bank of England Base Rate if it continues to run beyond the first six-month period just mentioned?
- Employer/Subcontractor Agreements
Abbey Healthcare (Mill Hill) Ltd. v Augusta 2008 LLP 9th July 2023 UKSC 23 overruled Parkwood Leisure Ltd. v Laing O’Rourke Wales and West Ltd. 29th August
2013 EWHC 2665 (TCC) whereby ‘collateral warranties’ were previously thought to be ‘construction contracts’ pursuant to the ACT. In particular, warranties to third parties which merely provided that work already completed by a constructor was satisfactory could not be regarded as an agreement to perform ‘construction operations’ so as to fall within the ACT.
Q: Employer /Subcontractor Agreements [”ESAs”] are used where specialist subcontractors design and perform work of a kind outside the abilities of a main contractor who does not have a contractual obligation to the Employer for such specialist work. Their purpose is to link the Employer and Subcontractor contractually with rights and obligations which necessarily bypass the main contractor.
Are ESAs covered by the Act?
- Adjudication Appointment by an ANB which is not identified in the Construction Contract.
The Notice to Adjudicate identifies the contractually mentioned ANB as the one to be invited to appoint. The ANB is unable to appoint in time under the ACT and another ANB is requested to appoint instead and they appoint you.
Q: Are you properly appointed?
- A claim under the ACT related to cladding that fell foul of the extended retrospective limitation period of thirty years introduced by the Building Safety Act 2022.
It was argued that the claim was too wide to fall within the ACT because S108(1) limited adjudication to matters arising ‘under the contract’.
Q: Was that argument correct?
- You are representing a Party whose key witness is unconsciously biassed but believes his/her testimony is true. Unfortunately it is not true because there is overwhelming evidence otherwise.
Q: You are shortly to serve your client’s pleadings and evidence. What do you do if a key witness’s testimony will clearly be harmful to the outcome that your client desires?
- A ‘smash and grab’ adjudication.
The Contract is the JCT Intermediate Contract 2016 with the following payment mechanism:
- the Contractor may, no later than the Interim Valuation Date, make an application to the Quantity Surveyor (a Payment Application);
- the due date for payment is seven days after the Interim Valuation Date;
- the Contract Administrator shall, not later than 5 days after the due date, issue an Interim Certificate;
- the final date for payment is 14 days after the due date;
- a Pay Less Notice may be given no later than 5 days before the final date for payment.
The Contractor makes an interim application for payment on the Valuation Date. The application is compliant and states the sum considered to be due (£345,678) and the basis on which that sum was calculated.
Five days after the due date, the Quantity Surveyor issues to the Contractor a detailed valuation in exactly the same format as the Contractor’s application, stating the sum the Quantity Surveyor considers to be due (£123,456) and the basis on which that sum was calculated. The Quantity Surveyor’s covering email states: ‘Any questions please let me know or, if your happy with my approach, if you confirm [the Contract Administrator] will issue the payment certificate’.
The Contractor does not respond to the Quantity Surveyor’s email and no Interim Certificate is issued.
After the final date for payment has passed the Contractor notifies the Employer that, in the absence of a Payment Notice or a Pay Less Notice, his application represents the notified sum and is payable in full. The Employer disputes this and, within the next few days, pays the amount stated in the Quantity Surveyor’s assessment (£123,456).
Q: In the adjudication the Responding Party (Employer) argues that the Quantity Surveyor’s assessment represents a valid Pay Less Notice.
The Referring Party (Contractor) disagrees, arguing that a Pay Less Notice can only be given by the Employer, unless the Employer notifies the Contractor that the Contract Administrator or Quantity Surveyor or any other person is authorised to do so:
4.13.1 ‘A Pay Less Notice given by either Party shall specify the sum he considers to be due to the other Party at the date the notice is given and the basis on which that sum has been given. Such notice:
.1 (where it is to be given by the Employer) may be given on his behalf by the Architect/Contract Administrator or Quantity Surveyor or any other person who the Employer notifies the Contractor as being authorised to do so’ The Referring Party refers to the RIBA Guide to JCT IC16 which supports the Referring Party’s view:
The pay less notice should be issued by the employer, unless the employer has notified the contractor that the contract administrator, quantity surveyor or other person is authorised to issue the notice on its behalf.
- Counsel is unavailable at short notice
The tribunal has been careful to set a hearing date to which all Parties have agreed. Unfortunately there has been a mistake and one of the Counsel misunderstood and insists he/she cannot attend. The hearing date is due in two weeks time.
Q: The opposing Party objects to a postponement. Do you proceed anyway as agreed after informing the Parties?
- A Payless Notice is given before the date for the Payer Payment notice has passed
Unfortunately, no Payment Notice is then given.
Q: Is the Payless Notice valid in such circumstances.
- A developer becomes insolvent owing a sum to a contractor.
The assets of the developer are bought for £1 by its erstwhile owners by way of an assignment. The contractor claims the sum due from the assignee who refuses to pay. Then the Contractor obtains a favourable Decision under an adjudication.
Q: What happens next?
Suggested answers
The lively discussion produced suggested answers which can be downloaded here.