How to Deal with a Construction Dispute?

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Construction Dispute

The hot topic on everyone’s mind in the Construction industry right now is disputes – whether it’s contractors vs sub-contractors or local authority’s vs individuals – people want to know how to deal with disputes

On Sunday, Construction Director Bill Barton answered a reader’s question in the Sunday Times on whether he could stop his local Council’s noisy, disruptive work on an adjoining wall.

Those of us who’ve had to engage with local authorities will know that they often feel that they are free from the obligations that bind the rest of us. In this case, though, the works appear to be in violation of the Party Wall Act, so a Court injunction could be the way to ensure they cease. Read Bill’s full answer here.

Back in July 2021we discussed how the impact of the pandemic, Brexit and supply chain issues were creating the “perfect storm of problems” for the construction industry and how disputes were ultimately inevitable. For example, the confusion caused by the first Covid-19 lockdown in March 2020 led to ambiguity around whether a force majeure event had occurred.  This usually led to one of the parties attempting to terminate the contractor’s employment.  More often than not, it was held this behaviour was a repudiation of the contract and not a valid termination.

So, what can you do when faced with a dispute?

It is important to remember that disputes can be lengthy, time-consuming, and stressful, so it is beneficial for all parties to resolve the dispute as quickly as possible. Of course, the best advice is to adopt measures at the inception of a project, such as agreeing to clear terms and keeping a record of any variations, which will prevent disputes from occurring in the future. However, this is not always implemented.

Parties are obliged under the Civil Procedure Rules to make reasonable efforts to resolve any dispute before the formal issue of proceedings. This could involve writing to the other side and agreeing to settlement. Parties may be keen to pursue litigation proceedings, but many disputes can be resolved quickly using alternative dispute resolution (ADR) methods, which offers an inexpensive but effective alternative. This includes mediation and adjudication.  More information on ADR and Adjudication can be found on our website here.

If one party decides they should formally issue a claim against the other, then they need to ensure they follow the Pre-Action Protocol (The Pre-Action Protocol for Construction and Engineering Disputes 2nd edition in respect of Construction disputes) before they issue the claim in Court.  If you do not follow the Protocol, then this can have cost consequences during the court proceedings.

One alternative to litigation is adjudication.  All parties to a ‘Construction Contract’ (as defined by Part 2 of the Housing Grants, Construction and Regeneration Act 1996) are entitled to refer a dispute to Adjudication.  This is a short process which aims to resolve a dispute within 28-42 days of it being referred to adjudication.  There are typically around 3-5 submissions made by each party.  The party which refers the adjudication starts the process by issuing the ‘Referral’.  The other party is then given 7-14 days to rebut the Referral with its ‘Response’.  The referring party is allowed to provide a ‘Reply’ (usually within 7 days) to the Response.  The parties may be allowed to provide further submissions.  However, adjudicators are conscious of trying to keep the submissions to a minimum in order to allow the process to be succinct.

Disputes which are usually referred to adjudication relate to payment (and, more specifically, the entitlement to issue a Pay Less Notice (a ‘Pay Less adjudication’)), the quality of the work carried out and whether there has been a repudiation of the contract.

Most standard form construction contracts, including the Joint Contract Tribunals (‘JCT’) and New Engineering Contract (‘NEC’), allow the parties to the contract to refer a dispute to adjudication.  However, if you are using a bespoke form of contract then you will want to consider including an adjudication provision.

At Barton Legal, our construction experts regularly advise both international and national clients, individuals, and companies on a multitude of issues in the construction industry. We work in collaboration with our clients and assist them in securing a commercial settlement for their disputes, wherever possible avoiding litigation.

If you need advice, support, or simply have a question – please get in touch.

Bill Barton, Construction Director

0113 202 9550