Construction Act - Consultation Fatigue Sets In

The Local Democracy, Economic Development and Construction Act 2009 (the New Construction Act) was enacted on 12 November 2009. Part 8 made the long awaited changes to the Housing Grants Construction and Regeneration Act 1996 (the Construction Act). The changes are not yet in force. Before they can be brought into effect, consequential changes need to be made to the Scheme for Construction Contracts. The Department for Business Innovation and Skills says that it "hopes" to carry out consultations on the consequential changes in "early 2010". However, as a general election looms, the timing of any such consultation and indeed whether it takes place at all is uncertain.

This uncertainty follows 5 years of consultations over amendments to the Construction Act and an act that works properly for the benefit of the construction industry as a whole seems as far away as ever.

The Changes

The New Construction Act makes a number of changes, which can be divided into two categories, namely changes to adjudication procedure and changes to payment procedures.

1. Changes to adjudication procedure

1. The removal of the requirement for contracts to be in writing.

   The current requirement for contracts to be in writing for the adjudication provisions of the Construction Act to apply is to be abolished and the New Construction Act will apply to contracts whether they are oral, written or partly oral and partly written.

   This new requirement is a reaction to the case of RJT Consulting Engineers Ltd -v- DM Engineering (Northern Ireland) Ltd [2002] BLR217 where the Court of Appeal decided that all the terms of the contract must be in writing for it to satisfy the requirement. This in turn led to numerous jurisdictional challenges on the basis that the contract was not in writing.

   While there may be a consequential reduction in jurisdictional challenges, there is likely to be an increase in adjudicators' workloads generally as they will have to deal with more arguments over contents and terms of contracts.

2. Adjudication provisions must be in writing

   The right to refer a dispute to adjudication and the basic requirements of the adjudication procedure will still have to be in writing and if they are not, then the Scheme for Construction Contracts will apply.

   This will lead to greater clarity and easier references to adjudication.

3. Power to make corrections

   In a straightforward amendment, the contract must contain a written provision permitting the adjudicator to...