REUTERS | Jose Miguel Gomez

The dangers of not substantiating claims

I was looking back over the files from an old adjudication where I had represented the responding party. This case was interesting because it was one of those claims where the referring party’s lack of preparation reversed the usual (and true) maxim that adjudication favours the referring party.

In my experience, a lot of referral notices set out the facts of the claim, usually in great detail, but often without much evidence to back them up. I have frequently wondered whether this is deliberate or not. Certainly the effect of such an approach is usually that the responding party only sees the full extent of the evidence against it when it receives the reply, so it does confer some advantage on the referring party.

My experience from preparing claims suggests a less cynical reason.

How claims are drafted in the real world

A typical claim might start with a dispute between the parties that generates copious correspondence but no resolution. As works on site wind down, the project team on both sides evaporates. The final account looms and the parties identify the areas of dispute. The contractor’s QS, or its claims consultant, then pulls together all the post-event correspondence into a formal claim document. This claim is rejected by the employer, so the claim document is handed to lawyers to turn into a referral document, with instructions that adjudication proceedings are to be served within a month.

At this point the lawyer has two options: take the information given by his client and do what the client asks, or ask the client for more time to properly investigate and substantiate the claim. Commercial (and other) pressures and concerns about legal fees often dictate the first option. As a result, referrals are often largely unsubstantiated.

The problem is that this approach to assembling claims is inherently flawed. The QS will often have no direct knowledge of what is usually a technical dispute. Those that do know have moved on and are otherwise occupied. They have archived their files. As a result, vague hearsay recollections become treated as gospel truth and questionable claims made months or years earlier go unchallenged.


This brings me back to the dusty files on my desk. The referral bundle  consisted of a very detailed referral notice with a comprehensive and compelling narrative, full of detail about the events leading up to the dispute and its consequences. However, it came with no witness statements, no expert reports and little documentary evidence.

So why did it do the referring party no favours? Quite simply, almost every key fact stated in the referral and relied upon was contradicted by the body of evidence.

A reply and a surrejoinder subsequently introduced a plethora of witness statements and expert reports. The referring party tried to reformulate its claim within the confines of the notice of adjudication but, as the facts that it had relied on were wrong, its case was ultimately unwinnable.

The magic of the statement of truth

The irony is that it does not usually take long to identify key witnesses and take witness statements. At that point a curious thing happens:

  • If you telephone a witness and ask him to confirm the client’s version of events of a year or more ago, he is likely to broadly agree in the hope that you stop badgering him.
  • If you sit that same witness down with a chronological bundle of drawings, notices and contemporaneous correspondence, ask the witness to take you through it and write it down as their witness statement, and finally ask them to sign a statement of truth, then a different and far more nuanced story will usually emerge.

This process may well result in some of the client’s fundamental assumptions about the facts being wrong. This may be frustrating, but it is far better to deal with the resultant problems behind closed doors than in front of an adjudicator. Far more importantly, because a witness statement backed by a bundle of evidence is very compelling and difficult to rebut, a stronger case emerges.

And the moral of this tale?

Referring parties should resist submitting their notice of adjudication until the dispute has been properly investigated and substantiated. Although this may mean it will take a little longer and cost a little more at the outset, before the dispute is referred to adjudication, it is usually in the referring party’s interest to be more thorough.

In the case in hand, not only did the lack of substantiation possibly result in the loss of the claim, but it also probably cost the client more money. It still had to produce the witness statements and expert reports and ended up producing three sets of legal submissions. A little due diligence at the outset would have avoided this and may even have resulted in the claim being put better in the first place, or being dropped earlier, enabling efforts (and money) to be focused on other matters.

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