HCR Law Events

1 June 2021

Can construction professional negligence disputes be resolved via adjudication?

Adjudication is available as a form of alternative dispute resolution (ADR) for any type of non-clinical professional negligence dispute, of any value, including multi-party disputes. The Professional Negligence Bar Association (PNBA) introduced the Adjudication Scheme to allow for such disputes to be determined by an appointed adjudicator; the scheme followed successful use of the process in construction disputes.

The Professional Negligence Pre-action Protocol was amended in May 2018 to include a requirement on the parties to consider adjudication at an early stage in the proceedings. In fact, the Protocol Letter of Claim should indicate whether the claimant wants to refer the dispute to adjudication.

The process for professional negligence claims must be by mutual agreement – it is described as a voluntary ‘process by which an independent adjudicator provides the parties with a decision that can resolve the dispute either permanently or on a temporary basis, pending subsequent court determination’. Here we look primarily at the adjudication of construction professional negligence claims.

Is the Adjudication Scheme the right route to take?

The recent case of Beattie Passive Norse Ltd & Anor v Canham Consulting Ltd contains some useful guidance from the judge to remind parties involved in a construction professional negligence claim to consider using the PNBA scheme.

The judge held that in a claim for £3.7m, the claimants were only entitled to £2,000, that being the cost of remedial works. The judge considered it was a ‘great pity’ that the parties did not adopt the scheme, led by a group of experienced Queen’s Counsel in the field, to resolve their dispute in this case. He noted that it would have been “far quicker and much more economical than conducting a High Court trial which lasted over three TCC weeks, with all the costs to the parties that such a trial entails.”

The case highlights the importance of considering the use of the Adjudication Scheme as a cost-effective avenue to resolve a dispute in a much shorter time frame.

The real advantage is the scheme’s flexibility, where parties can agree in advance the terms of the adjudication. The fact that it is consensual means that parties could refer multiple disputes, which is not possible in a statutory adjudication. Additionally, there is an important benefit of having an experienced professional negligence lawyer as an adjudicator. It is also worth noting that even in an adjudication, oral evidence and cross examination of witnesses is still possible.

Do carefully consider using the scheme; it has many advantages, but there may be circumstances in which the case is not suitable, if, for example, the complexity of evidence would be a factor for consideration.

Ultimately, the starting point is to get the framework of the case right from the outset. The three basic elements must be clear:

  • That the professional owed a duty of care
  • That they acted in breach of that duty
  • That the breach was the cause of loss to the claimant

Establishing, from the start, the scope of duty that is being alleged is crucial as this duty determines the recoverable loss.

Causation can also be a difficult point to prove in construction professional negligence disputes as there are so many hypotheticals involved. It can be difficult to prove that a project would have turned out differently if the construction professional had not been negligent; for example, would there have been an allowance for different design elements, would another construction professional have assisted? Consequently, the complexity of the issues involved in the case need to be properly considered; this will have an impact on deciding whether to use the Adjudication Scheme as an avenue to resolve the dispute.

So, the adjudication process for professional negligence claims is:

  • A cost-effective option for parties to resolve the dispute at an early stage before costs become disproportionate
  • An opportunity to obtain an independent view on the legal issues and merits of the claim which may assist in setting the parties’ expectations at a realistic level from the outset
  • Helpful in reaching an early settlement and avoiding court proceedings.

Finally, given the nature of construction professional roles which exposes them to the possibility of criticism when almost anything goes wrong on a construction project, it is important that professionals understand their obligations and have sufficient PI cover to protect themselves in the event of any negligence claims.

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