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Ask the team: why use Part 8 in adjudication?

Posted by Practical Law Construction on 28th September 2010.

Question: Why would I want to use CPR Part 8 in adjudication? While I know that the Technology and Construction Court (TCC) has supported its use, doesn’t it just take extra time and cost more money?

CPR Part 8

Part 8 of the Civil Procedure Rules (CPR) sets out an “alternative procedure for claims”. It’s the alternative to the more common Part 7 claim. Whereas Part 7 is all about starting a typical claim, most often to seek money from a defendant, a claimant may use Part 8 when it “seeks the court’s decision on a question which is unlikely to involve a substantial dispute of fact.”

Adjudication

Statutory adjudication has come a long way since it was introduced in 1996. In the same week as we write this Ask the team, Matt Molloy shares his experience of the parties using a stenographer to assist them in a complex adjudication. This sort of complexity is, perhaps, not what adjudication was designed for, but the industry (or some would argue, the industry’s lawyers) has made it its own.

However, despite its complexities, at its heart, adjudication is still about allowing the parties to a construction contract to quickly determine a dispute. After all, it still is a 28-day procedure. But it is the flexibility of adjudication, and the flexibility of the TCC when dealing with adjudication business, that sophisticated parties and their advisers must keep on top of.

Using CPR Part 8 in adjudication

As we set out in more detail in our practice note, a party who is not asking the court to award it a sum of money and who can set out largely agreed facts for the court to make its determination on, may use a Part 8 application in various ways in adjudication (section 9.2.1, TCC Guide).

Section 9.4.1 of the TCC Guide refers to Part 8 in the context of the adjudicator’s jurisdiction. This context could include, for example, issues about whether a dispute has crystallised, whether the contract was in writing, or even whether there was a construction contract.

Why bother with Part 8?

Picture a typical scenario: a party refers a dispute to adjudication and it wins. If the responding party fails to pay the sums awarded by the adjudicator, the TCC will usually enforce the adjudicator’s decision rapidly and effectively. As such, why might a party need (or choose) to use Part 8?

A party may use Part 8:

  • Before adjudication proceedings have commenced.
  • During the adjudication itself.
  • After the conclusion of the adjudication.

Before an adjudication starts

The referring party may know that the responding party has a genuine belief (which has some merit) that part or all of the works are not “construction operations” under the Construction Act 1996. If the referring party uses Part 8 to obtain a declaration that the works are construction operations, it may knock-out the responding party’s primary objection to the adjudication. This may bring it to the negotiating table. Alternatively, the responding party may be “forced” to accept a subsequent adjudicator’s decision (that is based on the court declaration).

Why go to the cost of adjudicating if you are not certain that you have a construction contract?

During an adjudication

The parties may agree to pause the adjudication by mutual consent to allow the court to give, for example, a binding determination about the effect of a particular contract clause. (Adjudication is flexible enough to allow them to agree to do this.)

If both parties are determined that their view should prevail, consider how much more cost-effective it may be to have counsel argue the point now, and the court give a final determination. The alternative is for the parties to spend time and money on adjudication, and then for one of them to subsequently dispute the adjudicator’s decision that is affected by that clause.

After an adjudication

A party who has maintained all-along that an adjudicator did not have jurisdiction could seek a declaration to that effect. If it can act quickly, issuing proceedings straight after it loses the adjudication, it may have a much greater say in how enforcement proceedings are run than it would if it simply refused to pay-up and forced the referring party to begin a Part 7 claim to enforce the adjudicator’s decision.

Note that, in this scenario, the court is likely to order that the Part 8 proceedings are joined and heard together with any Part 7 proceedings. The court discourages cross claims and encourages the parties to enter into “sensible discussions” to enable the issues to be determined in a single action. (Section 9.4.3 of the TCC Guide.)

Tactical advantage that Part 8 gives

Dispute resolution can be consensual, it can end after a short skirmish, or it can be a long, drawn-out campaign. Whichever camp your adjudication falls into, keeping a Part 8 claim in mind can help you put your claim (or defence) more effectively (and cheaper), or it may simply prepare you for you opponent’s next manoeuvre.

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