Sep 10, 2021
Construction Law Made Simple
What is adjudication?
Are you a principal or a contractor seeking to resolve a building or construction dispute under a construction contract?
Adjudication under the Construction Contracts Act 2002 (the Act) is a common dispute resolution process that is faster and more cost-effective than other options in NZ for resolving construction disputes. The Act generally applies to all construction contracts that relate to carrying out construction work in New Zealand. Most straightforward adjudications take less than 6 weeks to get resolved.
This article explores the ins and outs of the adjudication process, including the timeframes to expect.
If you are interested in pursuing an adjudication, please do not hesitate to get in touch with a member of our team to guide you through the process.
Process and Timeframes for adjudication
There are 7 steps in the adjudication process. They are outlined below, along with each of their approximate time periods.
We use adjudicators provided by the Building Disputes Tribunal who are New Zealand’s leading independent body providing adjudication services. The Building Disputes Tribunal have a wealth of information about adjudication on their website. For ease of use, we have taken the key information regarding the process and timetable and summarised it below.
- Notice of adjudication, day 0
The first step is the notice of adjudication from the claimant serving written notice of their intention to refer a dispute to adjudication on the party or parties to the construction contract.
The requirements for what a notice of adjudication must state are listed below:
- the date of the notice;
- the nature and a brief description of the dispute and of the parties involved;
- details of where and when the dispute arose;
- the relief or remedy that is sought;
- whether approval for the issue of a charging order is being sought;
- whether a determination of the owner’s liability and approval for the issue of a charging order are being sought;
- details sufficient to identify the construction contract to which the dispute relates including: the names and addresses of the parties to the contract and, if available, the addresses that the parties have specified for service of the notices.
Notice of adjudication must also include a statement of the respondent’s rights and obligations and a brief explanation of the process in the correct form.
- Appointing the adjudicator, day 0 to day 7
Parties may either agree on an adjudicator within 5 working days or the claimant can unilaterally request an Authorised Nominating Authority (ANA) to select a person to act as the adjudicator. We generally recommend the Building Disputes Tribunal as our ANA. They will choose a well qualified independent expert to act as the adjudicator. The Building Disputes Tribunal does not need the agreement of all parties to the selection of the adjudicator, so it speeds up the process to have them appoint one.
A person requested to act as an adjudicator must, within 2 working days, indicate whether they are willing to act in that capacity.
- The adjudication claim, day 7 to day 12
The claimant must draft their claim in writing (the adjudication claim) and provide it to the adjudicator and all other parties to the claim within 5 working days of receiving the adjudicator’s notice of acceptance.
The adjudication claim must specify the nature or the grounds of the dispute and be accompanied by a copy of the notice of adjudication. The claim is also normally accompanied by other documents that provide evidence that underpins the claim. The adjudication claim must also be consistent with the notice of adjudication.
- Responding to the adjudication claim, day 12 to day 17
A respondent and any owner who is a party to the adjudication proceedings has 5 working days to serve a written response to the adjudication claim on the adjudicator after receiving the claim or the adjudicator’s notice of acceptance (whichever is the latter). This is an extremely short timeframe for responding. In some cases the parties may agree to or the adjudicator will allow a longer time period for response if it is a particularly complex case.
A respondent or owner must serve any response on the claimant and all other parties to the adjudication when they serve the response on the adjudicator.
- Right of reply by the claimant, day 17 to day 22
For construction contracts entered into before 1 December 2015, a claimant who receives a response containing new or different evidence or grounds for opposing the claim should apply to the adjudicator to file further submissions in reply. Parties will usually be given 1 to 3 days each to file further submissions, although this may vary from case to case.
For construction contracts entered into or renewed from 1 December 2015, the claimant can serve a written reply to the respondent’s response to the adjudication claim within 5 working days of receiving the response.
- Right of rejoinder by the respondent, day 22 to day 24
If a respondent wishes to make a final response to the claimant’s reply, they should apply to the adjudicator immediately upon receiving the reply. Upon receiving a claimant’s written reply to a respondent’s response, an adjudicator can allow the respondent up to 2 working days to serve a rejoinder to the claimant’s reply.
- The adjudicator’s determination, day 24 to day 37
An adjudicator’s decision on whether any of the parties to a construction contract are liable to make a payment under the contract and their decision in relation to any disputes about the rights and obligations of the parties under that contract is called a determination.
An adjudicator must determine the dispute within 20 working days after receiving the response to the adjudication claim. Note that this can be extended to 30 working days, or another date as agreed to by the parties if the claim is particularly complex. It will not generally be extended past 30 working days so parties can expect to receive a decision within 30 working days.
The adjudicator’s determination is immediately binding on the parties. Whatever the decision states must be actioned by the parties and any payments made within two working days after the date of the determination (unless the determination provides for a later date for payment).
Parties may decide to challenge the determination by starting new court or arbitration proceedings or by agreeing to mediate, but in the meantime the payments must be made prior to any fresh proceedings commencing.
Where can I get more information?
If you have any questions about any of the topics in this article, please do not hesitate to get in touch with a member of our construction law team
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