The Referral Notice

While all of documents submitted in Adjudication are important, as each submission builds up the picture that the parties are trying to convince the Adjudicator is most plausible and believable, it all starts with the submission of the Referral Notice by the Referring Party.

To commence the Adjudication process, the Referring Party must serve on the other party a written notice of your intent to refer the dispute to adjudication. This ‘Notice of Adjudication’ defines the issues that you will be seeking the Adjudicator to consider. It is therefore critical that it includes all the key points as well as the remedy you are seeking.

As a general rule, the Notice of Adjudication should include the following information:

• Details of the contract

• Description of the dispute

• Details of where and when the dispute arose

• The remedy sought

• The names and contact details of the parties to the dispute.

When the Adjudicator is appointed by the Adjudication Nomination Board, he will request the Referral Notice is submitted within 7 days usually. Therefore it is key is to have this document prepared when the “Notice of Adjudication” is sent, to ensure the Responding Party are always under pressure.

The Referral Notice sets out the issue that is at dispute, the reason for bringing an Adjudication, a timeline demonstrating why the Referring Party believe the Adjudicator should find in their favour and perhaps most important of all the remedy that the Referring arty is seeking.

So this lends the question, how should a Referral Notice be set out?

The first and most obvious answer is perhaps the one most ignored and overlooked. The Referral Notice needs to be simple and concise, but stating the issues and how they have arisen and must be very easy for the Adjudicator to follow what the dispute is about and then most importantly what you, the Referring Party ask the Adjudicator the determine and award.

Everyone will have their own way setting out a Referral Notice. It is my view that is should be set out in two volumes. Volume 1 being the Referral Notice itself and Volume 2 all of the Appendix that are referenced in Volume 1.

Volume 1 should then be set out in with the following sections:

Detail In the ‘Assessment of the Amount Due

This being a preamble where in one paragraph you sum up the details of the contract and the issue that is in dispute and that the Referring Party is seeking to have the Adjudicator determine.

Executive Summary

This is the effective summary of the entire document that you are going to lead the Adjudicator through in order to have the Determination in your favour.

The Executive Summary should start by stating the Parties to the contract that is in dispute, the nature of the dispute and then a short précis of the actual dispute.

The final paragraph should leave the Adjudicator under no illusions that this was the only way that the dispute was going to be resolved, with wording such as the following.

The Referring Party has therefore had no alternative but to commence this Adjudication in order to have their contractual entitlement to the [nature of dispute] confirmed by an Adjudicator.

Definitions, Abbreviations & Clarifications

This section is exactly what it says, where you want the Adjudicator to be clear what a particular term you may need to use frequently you provide the definition of the term, often this will be taken from the contract between the parties, for example:

“Additional Services”

means any services, additional to the Services, that the Consultant is instructed to carry out in accordance with clause 12 as a Services Variation;

“Building Contract”
means the main building contract entered into between the Contractor and the Client dated 10th October 2015 for the design and construction of the Works, a paper copy and electronic copy of which have been made available to the Consultant;

“Consultant’s Application Date(s)”
means the date 4 days before the relevant Contractor Application Date;

“Consultant’s Representative”
means Mr Kapil Dev (or such other person as the Consultant may appoint and who is approved by the Contractor in accordance with clause 4) who will perform the role of the Consultant’s Representative as set out in clause 3;

Likewise where you are going use standard terms regularly then you show how how going to abbreviate them, for example:

EoT – Extension of Time

JCT – Joint Contract Tribunal Minor Works Contract 2011

AfP – Application for Payment

In order to assist the Adjudicator the first time the term is mentioned it is preferable to include the full wording and then the abbreviation before using only the abbreviation going forward, for example.

this Extension of Time (EoT) is from 21 January

Finally you can also include any clarifications of how you have referenced items in the document, for example you may use Italics when quoting others or the contract, for example:

Final Payment [5]

4.12 1 The amount of the Final Payment to the Sub Contractor shall be the Final Sub-Contract Sum, which shall be calculated by the Contractor in accordance with whichever clause 4.3 or 4.4 applies, less only the total amount previously paid as interim payments under the Sub-Contract.

Clarification / Amplification of the assessment of the amount due.

This section is where you begin “walking” the Adjudicator through the case, what it’s about and ideally in chronological order, however written in such a way that it is easy to follow for the Adjudicator to understand and where necessary each and every event written and detailed in such a way that a completely independent person should be able to pick up the document and read it from cover to cover and understand the following:

• How the contract was formed, particularly in relation to the dispute

• How the contract has been administered by both parties and in particular the breach by the Responding Party

• If the breach has been consistent and regular, how this has occurred and when rectified (if at all)

• The measures that the Referring Party has taken to avoid Adjudication by trying to reach an amicable but fair settlement

• The remedy (in broad terms) that the referring party is seeking to have imposed. E.g. the payment of a sum of money, or the method of measurement etc

What is clear though is that by the end of the Adjudicator reading this section is that they understand the form of contract and clause under which the dispute is brought, the issue and how it has occurred, why the Referring Party’s assertion is correct and the remedy sought to correct the situation.

The Mechanism by which the Amount Due has been calculated

This section is quite clear in the title, but vital as it shows in detail what the Referring Party believes they are entitled to, and the basis of calculation.

This calculation can be complex in the event it’s a re-measurement or quite simple if it relates to a payment not made. However what it critical is that the calculation and its basis is clear and unambiguous.

This section is short and concise and should be no more than three to five paragraphs. The intention of it is to crystallise for the Adjudicator the sum claimed based on the details of the argument which they will have just reviewed in the step by step clarification of the previous section.

The Assessment of the Amount Due

This section is a follow on from the previous where you are stating how you have calculated the sum you are claiming and on what basis it is being calculated. In this section the intention is to state it quite clearly, for example:

10.1 Adjudication

The Remedy Sought

By now the Adjudicator must be clear from the dialogue that has been provided in the Referral Notice of what the form of contract is, the nature of the dispute, how the dispute has transpired, what the Referring Party believes they are entitled to to correct the breach and how this entitlement has been calculated.

Up until now the Adjudicator will have a fairly sound understanding of the remedy you seek, but in this final section it is summed up in a number of key points. These will include but not be limited to the following:

• Adjudicators Cost – As the Referring Party believes in their case and that they will prevail you request that the Adjudicator finds in your favour in relation to his fee. Some Adjudicators will stick with the spirit of split costs, but others may apportion costs based on their Judgement. For example if every claim you have made is determined in your favour then it should only be right and proper that you are awarded the cost.

• Interest – Where the sum you are claiming is late than you are entitled to interest under the Late Payment of Commercial Debt Regulations, together with a penalty charge dependent on the sum owed. Here you must assert your right under the regulations, state the interest rate (statutory or the rate inserted in the contract) and your basis of calculation. This is to ensure it is in accordance with the Regulations, particularly calculated on a simple interest basis per day. The following are model words that can be used:

The Referring Party asserts that interest be levied from the final date of payment as determined by the contract until payment is made at the Bank of England Base Rate prevailing at the time the amount became due, plus 5% (Five Percent) per day calculated on a simple interest basis. The Bank of England Base Rate during the period of the contract works has been 0.500%. (Half of One Percent) and therefore assert that the interest rate is 5.5% (Five and a Half Percent). The Referring Party further assert their right to the Fixed Charge of One Hundred Pound Sterling (£100) under the Late Payment of Commercial Debt Regulations 2013. This sum has been calculated up to the date of the Notice of Adjudication

• Payment Period – Here you request the Adjudicator to determine when (in the absence of any contractual requirement) any award that is made in your favour must be paid by. This should never be immediately, as this is not feasible, but you request that it is no more than 5 working days. However the actual period will be stipulated by the Adjudicator as part of the Judgement.

• Balanced Judgement – As Adjudication is considered “rough justice” as it does not have the same format at legal pleadings this remedy is effectively to state that whilst the Referring Party assert their rights to the sum claimed etc that they claim they also respect the Adjudicators right to determine a sum that is different based on the evidence provided by both parties.

• Summary Judgement – Whist this will be a legal remedy available in the event of default it is preferable to include it for good measure.

As stated at the start of this section the remedy requested will be to suit the basis of the Referral Notice although this post has been written from the perspective that it relates to payment, as this is the basis of the majority of disputes.

Volume 2

As stated earlier it is preferable to submit the document as two volumes as then where in Volume 1 you draw the Adjudicators attention to a specific document this is then included in full in the Volume for ease of reference.

This volume will be made up of two parts usually:

• Attachments – These are documents specifically produced for the Referral Notice such as the interest calculation under the Late Payment of Commercial Debt Regulations and should be referenced, for example:

A            Document produced for this Referral Notice
               Cedars Housing Association – Interest calculation

• Appendices – These are documents that form part of the contemporaneous records and should be referenced, for example:

1            Electronic Mail
              12 October 2014 (Mr Robert Mugabe to Mr Stuart Lancaster)
              RE: Failure to make Payment in accordance with the Contract

This Referral Notice will be the commencement document for Adjudication and how it is constructed will in most instances go a long way towards determining the outcome. It is therefore critical that it is done professionally, although that would always be the stance of someone looking to be engaged for this process. However it is the seminal document and while it could cost a significant sum to prepare, it can also result in the remedy that you require.

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