On 21 June 2019 the Technology and Construction Solicitors Association (TeCSA) launched the pilot of a low value disputes adjudication service for disputes up to £100,000 excluding VAT and interest.
The pilot only applies to financial claims for payment of a liquidated sum and does not apply if the amount sought is unquantified such as a claim for damages or loss and expense to be assessed. The bulk of lower value claims are likely to be covered as it will include claims for an interim or final payment, retention, sums certified under a contract, damages and loss and expense.
It only applies to claims under a construction contract within the meaning of the Housing Grants, Construction and Regeneration Act 1996 and to claims under other contracts that have adjudication provisions incorporating the Scheme for Construction Contracts (England and Wales) Regulations 1998.
The pilot is likely to appeal as it caps the fees and expenses that an adjudicator may charge on a sliding scale from £2,000 plus VAT for disputes up to £10,000 to £5,000 plus VAT for disputes between £75,001 and £100,000.
TeCSA says it has launched the pilot as there is considerable evidence that the costs of adjudication put parties off using it to resolve low value disputes. Anecdotally there is certainly a growing concern amongst practitioners and clients that adjudicator’s fees are an uncontrollable variable and prone to significant variance depending on the adjudicator. As such there is little doubt that this cap will appeal to SMEs and others with lower value disputes and it is likely that TeCSA will see an increase in applications.
The primary question will be whether the cap dissuades adjudicators from taking part but it is imagined that many adjudicators will still want the work even if they have to be more circumspect as to their fees. Under the pilot, adjudicators are given the right to resign in circumstances where the referring party has undervalued the claim or if the claim is not for a specific sum of money. Equally, if the claim proves to be of a higher value than initially stated, the adjudicator is entitled to move up the sliding scale.
The application fee for nomination is £350 and the pilot will run until November 2019.
Jan Rzedzian, Head of Construction at Hay & Kilner, is a member of TeCSA and is accordingly well-placed to assist clients with an interest in bringing an adjudication under the low value disputes pilot scheme.