The Construction Act: A Practical Guide

Structural Survey

ISSN: 0263-080X

Article publication date: 1 March 2000



Wood, D. (2000), "The Construction Act: A Practical Guide", Structural Survey, Vol. 18 No. 1.



Emerald Group Publishing Limited

Copyright © 2000, MCB UP Limited

The Construction Act: A Practical Guide

The Construction Act: A Practical Guide

Chandos Press (Tel: 01865 882727)ISBN 1 902375 20 3

New primary legislation dealing specifically with construction related matters in England and Wales is not a common state of affairs. It was only in 1984 that a dedicated Building Act appeared while, as is well-known, until the 1960s the Building Regulations were derived from Public Health legislation. Consequently, the coming into force of the Housing Grants, Construction and Regeneration Act 1996 in May 1998 caused considerable interest in construction circles and, because of its novel approach, a certain amount of trepidation. Part 2 of the 1996 Act, known in construction circles as the "Construction Act", is the result of Sir John Latham's Report, Constructing the Team, which made its final report in 1994. Its brief was to look into the manner in which construction contracts operate and specifically to try and encourage a spirit of compromise instead of one of conflict in the building industry. The practical operation of the statutory scheme proved to be highly controversial when drafted and delayed the enactment of the legislation.

The construction aspects of the Act deal essentially with just two issues in a handful of sections. These are referring appropriate construction based disputes to adjudication and trying to modernise the payment process, primarily between main and subcontractors. This would seem to be pretty tame stuff but the reality is different because, if the parties do not incorporate appropriate provisions as to adjudication and payment into their contract, the statutory "scheme for construction contracts" will automatically apply if the contract falls foul of the 1996 Act. Provision to take a dispute to adjudication under the terms of a contract is nothing new. Standard forms of contract have for some years contained contractual adjudication provisions. Engineering examples come to mind where, for example, the engineer's decision under the ICE conditions will comply with what is normally understood by adjudication (see ICE Conditions cl.66).

As readers will no doubt be aware, the statutory adjudication provisions are centred on section 108 of the 1996 Act. The only major exceptions to the incorporation of the statutory scheme into building contracts are oral contracts and contracts with residential occupiers. If the contract comes within the scope of being a "construction contract" there must be some conforming contractual adjudication scheme in place; otherwise the statutory scheme will take effect. The scheme contains a very detailed and speedy set of procedures from the giving of initial notice to the enforecement of the adjudicator's decision. The scheme's approach to the payment provisions is somewhat more flexible. Construction contracts of 45 days or more must include an entitlement to stage payments and any relevant contract must include adequate machinery to ascertain how much is to be paid and when the payments are due including the final one. However, the payment provisions do not automatically transfer into a non compliance contract unless there is a "pay-when-paid" clause in contravention of the Act, or the entire payment provisions are contrary to the legislation.

Martin Wood has produced a first rate commentary on the construction aspects of the Act while his publishers have presented the book in a very attractive format. The format is one which more publishers should take note of, setting out the points clearly and in a very "user friendly" manner. Plenty of space between each line and each paragraph always benefits a book of this nature. Chapters are developed logically while the procedural steps are clearly laid out for quick reference. One very useful aspect is the "Key Points Summary" which comes at the end of each chapter. This goes to the "core" of the various aspects of the chapter helping the reader to comprehend quickly the main issues which the book is dealing with. I particularly like chapters 5 and 6 which deal respectively with the effects which the Act is likely to have on the standard forms and how to comply with the new scheme based legislation. Useful Tables and Appendices appear at the back of the book setting out the provisions of the Act, the scheme, a comparison of procedures involved in interim payments under JCT80 with those under the scheme and a note of relevant adjudication appointments made in 1998 and their sponsors.

Evidence to date is that fewer adjudications have arisen than were envisaged since the part 2 provisions became effective. Potential participants appear, to a certain extent at least, to have been put off because they have been apprehensive as to how the system will work in practice and the extent to which the adjudicator's award will be enforceable particularly if the scheme were to be relied upon. Other problems which might need to be considered are the extent to which a court can correct an obvious error of law and how, if at all, the courts will deal with the adjudicator if he is guilty of "misconduct" in the sense in which it was used in arbitration pre the 1996 Act.

The Act is very "Woolfian" in nature and no bad thing for that. Martin Wood has produced a sound, readable and practical book. Let us hope that along with the Woolf reforms, which produced the Civil Procedure Act 1997 and the Civil Procedure Rules, and the changes made to arbitration by the 1996 Act, dispute resolution in the construction industry will eventually become less costly, quicker and free from as much technical detail as can be justly dispensed with.

Douglas Wood

Related articles