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The new Construction Act which just recently became law (Dec. 2017) will implement on October 1, 2019 a fast-track mandatory dispute resolution process which is designed to help get cash flow moving more efficiently on a construction project and reduce the costs incurred when disputes occur on a project. The adjudication process will apply to all private and public construction contracts entered into on or after October 1, 2019.
The Authorized Nominating Authority who are tasked with the responsibility of developing a adjudicator certification program in order to certify the Adjudicators have between now through to Oct. 1, 2019 to have this program in place and certify qualified Adjudicators.
According to the Construction Act, the various parties to a construction contract will have the right to refer disputes to adjudication that flow from the issuance of a proper invoice under a contract including claims for services, materials, valuation of work, delay claims, set off's, deductions and delay claims.
Adjudication - Brief Overview
Commercial - Construction Credit Solutions
DISPUTES WHICH CAN BE ADJUDICATED
- the valuation of services or materials provided for under a construction contract;
- payment under the contract including change orders whether they are approved or not;
- disputes which are subject to a Notice of Non-Payment under Part I.1;
- Trustee set off amounts under Section 12 or lien set off amounts under Section 17.3.- - Section 27.1 non-payment of hold-back amounts;
- any other matters which the parties to the adjudication process agree on or which may be prescribed
The adjudication avenue will provide a fast decision by a qualified adjudicator on any matter which falls under the Construction Act Part II.1 of the Act. If one party is not satisfied with the Adjudicator's decision, the unsatisfied party may commence a court action to reverse what the adjudicator's decision was however, in the interim the Adjudicator's decision must be followed. Furthermore, the adjudication process will usually address one dispute/claim matter unless the parties to the contract / adjudication and the adjudicator agree to hear more than the single dispute/claim. No party can contract out of their rights under the Construction Act.
THE ADJUDICATION PROCEDURE is set by the construction contract the two parties enter into provided the contract complies with Part 11.1 of the Construction act. In cases where contracts do not address the adjudication procedure or the procedures within the contract do not comply with Part 11.1 of the Construction Act then the adjudication procedures set out in the Act will govern & override the contract.
ADJUDICATION TIMELINES are very aggressive in order to expedite quick results to keep the cash flow moving. Within five(5) days of the two parties agreeing on an adjudicator, the party which commenced the adjudication process must provide a copy of the written contract and all supporting documentation the party is relying on to the adjudicator. Within thirty(30) days of receiving the documentation the adjudicator must present their written decision addressing the dispute. If the adjudicator requires additional time to reach their decision, the adjudicator can request of the two parties an additional fourteen(14) days, however, either party may refuse the time extension request.
THE ADJUDICATOR COSTS are covered by the two parties on an equal share basis and each party will cover their own costs regardless of the outcome. However, if the adjudicator determines one party acted in a manner which would be deemed frivolous, an abuse of the adjudication process or acted in bad faith, the adjudicator can exercise the right to award costs against another party.
THE POWERS OF AN ADJUDICATOR are very broad and the decision carries a lot of weight, however, the powers are somewhat time sensitive. The adjudicator may make use of the following powers, plus any other powers of an adjudicator as outlined in a contract or subcontract.
- present the rules respecting the conduct of the adjudication process and the conduct of the parties involved, take any initiative to determine the pertinent facts and law, conduct site inspections, obtain the assistance of an accountant, building contractor, engineer, architect or any other person the adjudicator considers of value to help address matters of fact in question, fix the remuneration costs of an expert and which party shall pay the costs, and make a determination of the adjudication.
The adjudicator's written determination of the dispute matter must be made within thirty(30) days after receiving the documents required in the notice of adjudication. The power of the adjudicator's determination has no force or effect if the decision is made after the thirty(30) day time line unless the parties have agreed to the fourteen(14) day extention.
Article by: Stewart Valentine, Staff Writer
CHOOSING AN ADJUDICATOR
- the Construction Act Section 306/18 3(2) indicates adjudicators do not need to have a legal background as such adjudicators could include accountants, architects, project managers, engineers, etc. basically anyone with ten (10) years construction experience could apply for adjudicator certification.
- when two parties enter into a construction contract an adjudicator cannot be chosen in advance, the Act prevents this.
- when the two parties go to adjudication they both have to agree on the named adjudicator and the adjudicator has a few days to decide to be the adjudicator or not.
- in cases where no adjudicator can be agreed upon the Authorized Nominating Authority will designate an adjudicator to oversee the adjudication.
COMMENCING AN ADJUDICATION
- Any party who has a construction contract may commence an adjudication claim provided it is done so before the completion of the contract and both parties to the construction project have agreed otherwise.
- A party who wishes to refer the construction contract to adjudication must do so in written format. Within the Construction Act there are specific forms to be used.
- The written notice must include the names and addresses of the parties involved
- A brief description and nature of the dispute including details as to how the dispute came to be.
- Nature of the redress being sought.
- Include the name of the proposed adjudicator to conduct the adjudication process.