Construction Disputes ' Christmas Ambush

• Published date: 16 December 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Real Estate and Construction, Corporate and Company Law, Contracts and Commercial Law, Arbitration & Dispute Resolution, Construction & Planning
• Law Firm: Herrington Carmichael
• Author: Harriet Greener

In the run up to Christmas, most of us think food, tinsel and Christmas songs. For the lucky ones, your mind might be on the closure of your office given that many industries shut down during the Christmas period, if only for a few days.

The construction industry, like many others, is one of those industries that shuts down and re-opens in the new year.

It is uncommon for construction contracts, such as JCT's ('Joint Contracts Tribunal contracts), to specifically address the Christmas period and the industry shutdown. Instead, parties factor this period into the schedule of works. Whilst construction may temporarily shut down during the festive period, the disputes that arise do not, making Friday 23 December a dreaded day for many in the industry. The reason: Adjudication Notices.

If a contract falls under the remit of the Housing Grants, Construction and Regeneration Act 1996 ("the Construction Act"), a party has the statutory right to refer any dispute, at any time, for adjudication ("Adjudication Notices").

Adjudication is intended to be a swift and cost-effective process by which construction disputes can be settled, usually within a 28-day timeframe (unless the parties agree to extend this timeframe). The appointed adjudicator (decision maker) should be an expert on the matter at hand, with years of experience. The types of disputes that can be referred are extensive and can range from simple disputes regarding interim payments or delay and disruption of the works, to the more complex disputes regarding a breach of contract and/or professional negligence.

So why are the last few days before Christmas important?

Adjudication is a 28-day procedure overall, but also has timescales imposed when dealing with certain elements. For example, the usual timeframe for serving a referral notice or a response to the referral notice is 7 days. Under the Construction Act, weekends count as days and only Christmas Day and Bank Holidays are excluded.

Despite December supposedly being the month of charity and goodwill, it is not uncommon for Adjudication Notice to be served on the last few working days of the month. Why? Because, unless an extension of time can be agreed or granted by the adjudicator, the deadline for a defending party to respond can be as short as 7 days, as stated above. In practical terms, this means that if an Adjudication Notice is served on Friday 23 December and a response is required in 7 days, the deadline for filing this response would be 4...