Construction Disputes: Low Value Adjudication (LVD MAP)
The Low Value Model Adjudication Procedure (LVD MAP)
The construction industry is notorious for disputes between parties, particularly regarding payment disputes. Notwithstanding such disputes, the construction industry and the projects therein need to keep moving forward, infrastructure needs to be built, and there remains a perpetual need to develop new homes.
To keep all parties pulling in the same direction, even in relation to smaller payment disputes (relatively speaking), the Royal Institution of Chartered Surveyors (RICS) has a specific low value adjudication procedure for the efficient dispute resolution of smaller claims. The overriding principle being “pay now, argue later”.
The LVD MAP is designed to give parties to a construction dispute, where the value of the dispute is less than £100,000, a quick means to determine disputes, including payment disputes. This is particularly crucial for SMEs as they often face challenges in getting paid, particularly if there is an imbalance in the bargaining powers of the parties.
Any party that wishes to use the LVD MAP will need to fire off an application to RICS, and, once submitted, RICS will appoint an adjudicator. The adjudicator will handle the dispute and dictate the length and time scale for submissions, ensuring that the issues to be dealt with and any supporting documents are contained and relevant to the dispute at hand.
The timescale for resolving disputes through the LVD MAP is typically within 28 days of nomination of the adjudicator. This short time frame assists parties to resolve disputes quickly, keep money flowing in an industry where cash flow is king, and (hopefully) maintain business and working relationships between the parties.
Legal costs are generally not recoverable in adjudication but, given the issues are often narrow and less complex under the LVD MAP, legals costs can, in most cases, be kept at a level that still makes the adjudication process cost effective for construction clients, and, where successful, the adjudicators fees are usually recoverable from the losing party.
Enforcement of an adjudicator’s award
Failure to make payment pursuant to an adjudicator’s award can result in enforcement action in the Technology and Construction Court (TCC). The TCC, recognising that parties that have been through the adjudication procedure require payment as soon as possible, has developed a fast-track procedure for the enforcement of awards made by an adjudicator.
There is often no defence to failure to make payment pursuant to an adjudicator’s award and, generally speaking, the TCC takes a dim view of parties failing to comply with awards, often punishing the defaulting party in costs when looking at the enforcement costs.
Conclusion
At Leathes Prior Solicitors, we are well placed to assist construction clients not only with larger and more complex construction disputes, but also those clients with more modest value disputes where it is crucial that payment for work undertaken is received by the client as quickly as possible to assist with cash flow and keep the wheels of the construction industry moving.
If you find yourself involved in a construction dispute and are worried about the costs of instructing lawyers to guide you through resolving disputes, please do not hesitate to get in touch. We will be open and honest about the costs at the outset, allowing you to make an informed decision as to whether it is commercially viable to proceed. We can then act quickly to kick off the adjudication process and guide you through the same, offering assistance with any enforcement action required thereafter.
If you have a dispute you would like to discuss, our specialist Construction Team at Leathes Prior Solicitors would be pleased to assist you with this. You can contact us by email at info@leathesprior.co.uk, or by telephone on 01603 610911.