The Adjudication Society Report 18

The Adjudication Society Report 18

The Adjudication Society Report 18

“For last year’s words belong to last year’s language.
And next year’s words await another voice.
And to make an end is to make a beginning.”
- T S Eliot (Little Gidding)

My first article of 2020 takes a look at the Adjudication Society annual report into the development of adjudication.  This is report 18, although it is year 21 of adjudication as we have come to know and love it!  Hard to believe, isn’t it?

The Adjudication Society is the only body to have been carrying out consistent, regular research into adjudication since its introduction into the construction industry, and one member of the original research team remains on board. This gives the report a unique perspective into adjudication trends and practices.

The report is based on statistical returns from 19 Adjudicator Nominating Bodies, ANBs, the overwhelming majority of which have contributed consistently to all 18 reports, and responses to 2 questionnaires from adjudicators, one dealing with procedure, the other dealing with parties, cost, fees and natures of disputes. Unfortunately this year only 24 adjudicators responded to the questionnaires, but the information provided covered a minimum of 274 different adjudications. This was deemed to be an insufficient number for any meaningful deductions to be made from the data, but nevertheless provides a unique insight into adjudication from the adjudicator’s perspective.

So what did the report find? Here are some of the facts and figures:

0 - the apparent effect of the judgements of Grove Developments Ltd v S&T (UK) Ltd in the TCC and Court of Appeal.(In previous reports it was speculated that “smash and grab” adjudications might decline, or that “proper value” adjudications might rise.)

1 -  the number of complaints made about adjudicators to ANBs which were upheld (out of a total of 32).

4 - the average number of ANBs each adjudicator is registered with.

10 - the average number of decisions issued by an adjudicator each year.

13% - the percentage increase in the number of adjudications for 2018/2019 over 2017/2018.

30% - the percentage of serial adjudication appointments. And also the percentage of nil awards made by adjudicators in the year – quite a high figure, but reflective that some claims do not ask for a monetary award. The report estimates therefore that approximately 20% of claims are wholly unsuccessful, with 80% being at least partly successful.

39% - the percentage of adjudicators who set a timetable at the outset as a matter of practice. (This figure seems surprisingly low to me!)

39% of disputes relate to payment/payless notices, 18% to interim value of work, 16% to the final account, 5% each to repudiation/termination and defective work, 4% to variations in principle, 3%  relate to construction of contract terms, and 2% relate to damages/LADs. 

43% - the percentage of lawyer adjudicators registered with ANBs. There has been a steady increase in lawyer adjudicators, and a decrease in quantity surveyors, which the report suggests is characteristic of an “increasingly legalistic” approach to adjudication.

48% - the percentage of adjudications started by subcontractors against main contractors. This is the most common type of adjudication, but this is no great surprise and shows adjudication working as intended to improve cash flow through the industry. The second most common type is adjudication by main contractor against employer, where the figure is 34%.

54% - the number of adjudications in which the respondent is held liable for the adjudicator’s fee. Quite how this matches up with an 80% success rate suggested by the 20% of case in which a nil award is made is not explained, I would have expected the number to be higher to reflect findings of liability. Liability for fees is split in 17% of cases and in 29% of cases the referring party is liable. The report suggests that the referring party is wholly successful in just over half of all cases, and partly successful in a further one sixth of cases.

60-70% of the workload of the adjudicator respondents is adjudications.

70% - the percentage of adjudicators who had their appointment challenged on jurisdictional grounds. Following a challenge, only around half of adjudicators proceed to make a decision, which would indicate a very high success rate for jurisdictional challenges. The latter figure surprises me, as it often seems that jurisdictional challenges are made as a matter of form only, are a bit of a waste of time and effort and you have to do it just in case you manage to get away with it, but apparently not! I must revisit my enthusiasm for such challenges!

83% - the percentage of adjudications decided on a documents only basis.

90% - the percentage of adjudicator appointments made through an ANB.

155 - the number of adjudications, on average, started each month. The numbers are pretty consistent throughout the year, apart from November, which sees a steep rise, December, which sees a steep fall, and January, which sees a smaller but significant rise.  The report believes that there is now a general consensus against Christmas ambush tactics, due partly to the unavailability of key staff over the traditional Christmas shutdown period in the construction industry, and that parties therefore try to get adjudications started in November or delay them until January. Christmas adjudications do still happen though, as we here at Stevens & Bolton will confirm this Christmas!

180 - the report’s estimate of the number of actively practising adjudicators in the UK.

728 - the number of adjudicators registered with ANBs.

£1250 - the highest nominating fee of an ANB, although the average is £340 plus VAT.

1500 - the average number of adjudications commenced each year, calculated on a trend line basis, with the number increasing slightly each year since year 1.

£9000 - the average fee charged by an adjudicator.

£40,000 - the median average award made in year 2.

£52,000 - the highest fee charged by an adjudicator.

£9,200,000 - the largest award made in year 21.

The report is an intriguing snapshot of adjudication in the UK and demonstrates the firm establishment of a cadre of “professional” adjudicators who deal with a consistently high number of disputes each year.  It seems likely that current trends will continue with no great surprises on the horizon for year 22.

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