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25/05/2010
BUILDING WORK COULD BE LEGAL AND FINANCIAL DISASTER
Local chartered surveyor Jonathan Nugent, of Huntingdon-based Arbicon ADR (www.arbicon.co.uk), has issued a warning that the current recession is leading to some householders ending up with building problems and massive legal bills.
National surveys show that many homeowners are choosing to improve their homes rather than move in the current housing market – and with many builders looking for work as a result of the recession, prices for getting building work done are very attractive.
Mr Nugent believes that these are the very conditions which are leading to problems.
He said: “You do not have to be dealing with a real rogue builder for things to go wrong. Problems can easily arise over things such as a dispute over price, work taking longer than expected, arguments over ‘extras’, errors on the plans – the list goes on and on.
“Often homeowners are left legally unprotected because they have no formal contract with the builder. A building project is likely to be one of the most expensive purchases you will make so why wouldn’t you protect yourself properly with an inexpensive formal contract?”
Ideally, says Mr Nugent, the contract should include an effective dispute resolution process, such as adjudication, thus avoiding difficult, lengthy and expensive court proceedings if problems arise.
Adjudication is a fast track 21 or 28 day legal process which will resolve any dispute by obtaining a decision from an expert third party adjudicator. Typically the adjudicator is chosen from a panel of experts registered with the Royal Institution of Chartered Surveyors.
Mr Nugent said: “Professional advice and a properly prepared contract are essential before embarking on any building project. If you have a contract given to you by the builder, you must beware of any onerous obligations and your rights under it.
“There needs to be a clause saying that adjudication will be used to resolve disputes otherwise there is no right to adjudication if you are a consumer – which may mean that the only way you can enforce the contract is through lengthy and expensive court proceedings.
“A properly qualified surveyor can draw up a contract that will protect your rights. With so much at risk if things go wrong, having a good contract is essential.”
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05/05/2010
JUDGEMENT WILL LEAD TO FLOOD OF CLAIMS AGAINST MAIN CONTRACTORS WARNS ADJUDICATION EXPERT
Construction law arbitrator and adjudication expert Jonathan Nugent of Arbicon ADR (www.arbicon.co.uk) has predicted that a recent court judgment will mean most main contractors will start experiencing an ‘onslaught’ of adjudications.
In a landmark judgement on 13 April 2010 the Technology and Construction Court ruled that so-called ‘Tolent clauses’ in contracts do not comply with the Housing, Grants, Construction and Regeneration Act 1996 (the Construction Act). These clauses have in the past meant that sub-contractors taking a main contractor to adjudication in a dispute have had to pay all the main contractor’s legal costs and all of the adjudicator’s fees and expenses, irrespective of the outcome of the adjudication.
Such a clause made adjudication proceedings un-commercial because the costs could be as high as or higher than the award – the main contractor could employ as many lawyers as it wished at any price it chose to.
These clauses have in the past ten years been held to be valid on the basis of the precedent set by the case of Bridgeway Construction Ltd v Tolent Construction Ltd (hence the name ‘Tolent clause’) in April 2000.
Now, in the case of Yuanda (UK) Co. Ltd v WW Gear Construction Ltd, the court has delivered a new ruling that Tolent clauses do not comply with section 108 of the Construction Act because they are a real fetter on a party’s right to adjudicate at any time.
The judge importantly also ruled that if any part of a contractual adjudication clause does not comply with the Construction Act then the whole clause is void. In this situation the use of adjudication is governed by what is known as the ‘scheme’ under which the sub-contractor will be able to get a nominating body of its choice to appoint an adjudicator.
Jonathan Nugent said: “It is not surprising to see such a judgement since the new Construction Act, which has been passed but yet to come into force, makes Tolent clauses void, reflecting the spirit of the industry and parliament. It therefore appears very unlikely that the new ruling in this case will be overturned.
“The implications of this decision are considerable. During the ten years when Tolent clauses were considered lawful it has been normal for a number of main contractors to include these clauses in their standard sub-contract terms and conditions. Arbicon has seen numerous examples of these and numerous claims that just could not be made on commercial grounds.
“All of these claims which have been ‘written off’ in the past ten years as not worth pursuing can now be re-examined and perhaps brought to adjudication as the biggest impediment to the adjudication process has been removed.
“This change in the law will open the floodgates and we predict most main contractors will now start experiencing an onslaught of adjudications.”
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