A party to a construction contract has a right to refer a payment dispute for adjudication under the Construction Contract Act 2013 (the Act), where a decision will be reached within 28 days of the referring party's statement of claim (the Referral). The starting point when referring a payment dispute for adjudication is the Notice of Intention. This first step is of utmost importance as it sets the parameters of the dispute and the scope of what the adjudicator can decide. A wrongly drafted Notice of Intention could restrict what the adjudicator can decide and jurisdictional challenges from the responding party. This blog aims to provide helpful guidance on what should be contained in a correctly drafted Notice of Intention. Additional reading is also provided at the foot of this guidance.
When drafting the Notice of Intention, make sure it contains all information required by the Code of Practice, applicable contractual provisions and/or adjudication rules, if any. In addition, it is important that the Notice of Intention clearly sets out the claim you intend to cover in the Referral, as the adjudicator can only decide the dispute set out in the Notice of Intention. For this reason, I recommend that the Notice of Intention is drafted after the Referral and simply summarises the latter.
Section 5 of the Code of Practice states that the Notice of Intention SHALL include the following:
1. The name of each party to the construction contract – Double-check your contract to make sure the correct parties' names are included in the Notice of Intention. Failure to insert the correct names could result in jurisdictional challenges.
2. The address of the contacting parties – check your contract to make sure the correct addresses of the parties are used. Where the contract specifies an address for service of the Notice of Intention, that address must be used.
3. The contact details for each of the contracting parties
4. The relevant details of the payment dispute – Provide some background information explaining how the payment dispute arose showing that the payment dispute has crystallised. Some brief details about the subject matter of the dispute and the responding party’s reason for not paying should also be included.
5. The amount in dispute – The amount in dispute should be clearly stated
6. The nature of the payment dispute – This section should be carefully drafted as this will define the scope of the dispute that the adjudicator has jurisdiction to decide:
i. It is important that the dispute referred covers both liability and quantum if you want a determination of both
ii. The relevant details should also identify and describe the dispute in terms which enable the adjudicator to readily decide whether the dispute is within their expertise and competence
iii. It is recommended that the relevant details of the dispute are drafted as widely as possible to give you and the adjudicator room to manoeuvre during the adjudication
It is generally sensible to ask what sum is due rather than simply to ask whether a specific sum is payable.
7. The site address – Check your contract to make sure the correct site address is stated in the Notice
8. A copy of the relevant payment claim notice – This is typically your application for payment. This application must be in the format as outlined in section 4 of the Act
9. The response to that payment claim notice as provided for in section 4 of the Act – This is the responding party’s response to the payment application.
10. Relevant details to identify the construction contract. Where a written construction contract exists, this MUST be attached to the Notice of Intention.
11. Any supporting information that may assist an Adjudicator in understanding the nature of the payment dispute – See point 6 above.
The decision that you want the adjudicator to make and the redress sought should always be included in the Notice of Intention. If these requested decisions are not included in the Notice, then the adjudicator has no power to make such decisions.
Great care must be taken to identify the redress claimed. For example, if an order for payment is sought in addition to liability, it must be asked for. Where no order for payment is asked for, the adjudicator will only have jurisdiction to provide an opinion on the issues referred, and no power to make a monetary award. It is generally sensible to ask what sum is due rather than simply to ask whether a specific sum is payable. For example, catch-all words such as ‘or any other sums which the adjudicator considers due to the referring party' gives the adjudicator jurisdiction to decide to make its own valuation of the referring party’s claim.
The Notice of Intention should always say what relief is sought in relation to who pays the adjudicators fees and expenses, a request for interest on any money considered due, and an order that the other party pays any money awarded within a specific time. Recommended wording to cover these requests could be as follows:
i. a decision that the referring party are entitled to interest on such sums and the responding party make payment of such interest from the date on which the sums should have been paid to the referring party to the date of payment in line with Contract provisions and/or Statutory Instrument Number 580 of 2012 (European Communities (Late Payment in Commercial Transactions) Regulations 2012 and/or the Prompt Payment of Accounts Act 1997. Interest should be calculated at such rate and for such period as the Adjudicator considers appropriate;
ii. that the responding party pays the fees and expenses of the Adjudicator;
iii. that any such sum due to the referring party is to be paid by the responding party within 7 days of the Adjudicator’s decision (in line with section 7(1) of the Construction Contracts Act 2013) or such other period as the Adjudicator may deem appropriate.
The Construction Contracts Adjudication Service provides a Notice of Intention template (Form 4) for guidance only, which can be found here.
More information about the Act can be found here and a very useful users guide provided by the CIC is well worth the read.
