Building project – Consultancy services – Adjudication – Parties entering into framework agreement for building consultancy services — Claimant contracting separately to provide services for particular project – Details of contract being confirmed by letter – Framework agreement naming defendants as specified nominating body to choose adjudicator – Dispute arising in relation to fees – Claimant seeking to enforce award by adjudicator — Whether claimant entitled to request Royal Institute of Chartered Surveyors (RICS) to appoint adjudicator – Whether agreement constituting contract in writing – Claim allowed
The claimant provided building consultancy services, primarily as architects. The defendant local authority had entered into various written contracts with the claimant, under a written contract (the framework agreement) after the claimant had successfully tendered for the provision of building consultancy services on a number of projects. An adjudication clause in the agreement named the defendants as nominating body for purposes of choosing an adjudicator if required. One particular project was later split into two separate phases (A and B). Disputes arose between the parties in relation to the claimant’s fees in respect of phase B. The claimant commenced adjudication proceedings and an adjudicator was appointed.
The defendants contended that the adjudicator appointed by RICS at the claimant’s request had no jurisdiction and that the agreement was not in writing as required by the Housing Grants, Construction and Regeneration Act 1996, s. 107. The claimant argued that there was an effective agreement relating to phase B which was recorded in a letter of 12 June 2006 and accepted by the defendants by their conduct.
The claimant also submitted that there were clauses in the framework agreement which did not comply with the requirements of section 108 of the 1996 Act so that the statutory scheme for construction contracts in relation to adjudication applied, leaving the claimant free to seek the appointment of an adjudicator by an appropriate body such as RICS. The adjudicator decided that he had jurisdiction and concluded that the defendants should pay to the claimant the sum of £151,861.25 within seven days of receipt of a valid invoice.
The claimant subsequently issued enforcement proceedings. Issues arose about the extent to which the construction contract between the parties was in writing for the purposes of section 107 of the 1996 Act and as to the extent and scope of the incorporation of the scheme for construction contracts in circumstances in which the underlying contract did not comply with section 108.
Held: The claim was allowed.
(1) On the evidence before the court, the phase B agreement was evidenced by, or treated as being in, writing by reason of a letter of 12 June 2006 which clearly contained an offer, capable of being accepted, to proceed with the phase B works on the basis of a fee of 5.5% under the framework agreement. Whilst it could not be said that there was an agreement made by exchange of communications in writing for the purposes of section 107(2)(b), or that the agreement was “evidenced in writing” under section 107(2)(c) because it was not recorded in writing with the authority of the parties as recognised in section 107(4), the parties had made an agreement in writing because they agreed “otherwise than in writing by reference to terms which [were] in writing” for the purposes of section 107(3). An offer could be accepted by conduct which, in the context of section 107(4), could be taken to refer to written terms, such as might have been set out in the tender or counter offer. Similarly, if the parties had orally agreed that the framework agreement was to apply, that would similarly fit within section 107(4). Accordingly, the agreement between the parties relating to phase B was in writing within the meaning of section 107 of the 1996 Act.
(2) Section 108(5) of the 1996 Act required that all the adjudication provisions of the scheme for construction contracts should apply. Paragraph 2 of part 1 of the schedule to the scheme specifically made a distinction between a “specified nominating body” and an “adjudicator nominating body”. The former was clearly the nominating body specified in the contract between the parties and the latter was the body which nominated when there was no specified nominating body.
Given that the scheme adjudication provisions applied by operation of section 108(5), it could be argued that the scheme itself gave priority to the contractually specified nominating body to nominate the adjudicator. However, that circular reversion by the scheme back to what was specified in the contract was “trumped” by section 108(5) because it was inconsistent with the overall statutory purpose of incorporating the scheme as a whole when there were key non-compliances with section 108. In those circumstances, the adjudication provisions agreed by the parties would be disregarded.
It followed that the contractual clause enabling the defendants to nominate adjudicators was contrary to the 1996 Act and in particular the statutory policy of having impartial adjudicators. Thus there was no lawful specified nominating authority within the meaning of paragraph 2(1)(b) of the schedule to the scheme and RICS was a valid nominating body. Accordingly, there was a written construction contract relating to phase B and the adjudicator was properly appointed by the RICS. He therefore had jurisdiction and his decision was enforceable.
James Davison (instructed by Blake Lapthorn) appeared for the claimant; Justin Mort (instructed by Camden London Borough Council) appeared for the defendants.
Eileen O’Grady, barrister