Summary
RICS has played an active role during this Bill’s progress through Parliament and also with the Department of Business, Enterprise and Regulatory Reform (BERR).   An amendment we put forward to both BERR and Parliamentarians was put down By Baroness Hamwee and debated during the Committee stage of the Bill in the House of Lords. The amendment was debated but eventually withdrawn but the Minister, Lord Brett, agreed that there was an issue with the allocation of fees and promised to write to Baroness Hamwee on this issue.

Amendment process
Committee stage allows line by line scrutiny of a Bill and is the stage where changes tend to be made to legislation. The RICS amendment to Clause 135 of the Bill was put down by Liberal Democrat Peer Baroness Hamwee and concerned the division of the Adjudicator’s costs between parties.

Impact on Small Firms
Our concern was that the Bill as originally drafted could have left small firms out of pocket following the adjudication process, potentially discouraging them from seeking adjudication. This is due to an incompatibility between standard forms of contract and the measures the Bill introduces.

Provisions in current standard contracts allocate the Adjudicator’s expenses and fees between the parties. This addresses the liability for costs between parties and not their joint and several liabilities to the Adjudicator. In practice this amounts to an award for costs (the Adjudicator’s fees and expenses) where a successful party will be relieved of the expense of bringing the Adjudication.

Current Bill clause
The current drafting of the Bill will make this arrangement in current standard contracts void as any agreement on costs will have to be made after notice of adjudication has been served. As a result, the Adjudicator will not be able to allocate expenses between the parties.

RICS’ solution
RICS’ amendment sought to address this by entitling the Adjudicator to recover reasonable fees and costs that he incurs in the course of the adjudication. This would allow the Adjudicator to pass his costs on to one or other of the parties.

Next steps
RICS will be continuing to work on these issues both through the Parliamentary process and with BERR officials.

Local Democracy Economic development and Construction Bill: RICS overview 

"My Government will bring forward legislation to promote local economic development and to create greater opportunities for community and individual involvement in local decision-making."

RICS welcomes the strengthening of consumer protection and choice for social housing tenants in this Bill.

However, we maintain that similar controls must be introduced for the private rented sector in which regulation and redress must be strengthened in order to protect consumers in accordance with the recommendations of the Rugg and Carsberg reviews.

RICS is pleased with the general approach taken by the Government on construction contracts but believes amendments should be made to the proposals as set out in the draft Construction Contracts Bill if it is to meet all its intended policy objectives.

In particular we support the decision to remove the need for construction contracts to be in writing before the measures in the Construction Act apply.

Specific issues that must be addressed include clarification over the definitions of default and misconduct to reduce potential disagreement between parties.

The Bill also makes the regime around notices relating to payment and requirement to pay extremely complicated and is unlikely to be understood by users in the industry.

RICS Contact
James Rowlands
E jrowlands@rics.org