Adjudication under building contract — Enforcement of adjudicator’s decision — Whether adjudication invalid — Whether claimant late in referring dispute to adjudicator — Whether section 108(2)(b) of Housing Grants, Regeneration and Construction Act 1996 imposing mandatory requirements — Claim allowed
The claimant carried out works for the defendant pursuant to a JCT 98 standard form of building contract. It referred a dispute over payment to an adjudicator, who directed the defendant to pay £67,056 to the claimant. The defendant refused to pay, arguing that the adjudicator’s appointment had been invalid because, inter alia, the referral notice had not been served in time. The claimant brought proceedings in which it sought summary judgment to enforce the adjudicator’s decision.
Section 108 of the Housing Grants, Regeneration and Construction Act 1996 set out a two-stage process for referring to adjudication disputes arising under construction contracts. First, an adjudication notice was required, indicating the intention of a party to refer a dispute to adjudication. Then, by section 108(2)(b), the contract had to “provide a timetable with the object of securing the appointment of the adjudicator and referral of a dispute to him within 7 days of such notice”. In the present case, the relevant part of the contract was clause 41A. Clause 41A.4.1 provided that if an adjudicator was appointed within seven days of the service of the adjudication notice, “then the Party giving the notice shall refer the dispute or difference to the Adjudicator… within 7 days of the notice”. Clause 41A.5.5 provided that, in reaching his decision, the adjudicator should set his own procedure. Clause 41A.5.6 provided that any failure by either party to comply with any requirement of clause 41A would not invalidate the adjudicator’s decision.
The adjudication notice for the present dispute was issued on 3 December 2003. The adjudicator was appointed immediately, and required that the claimant provide him with a referral notice on or before 11 December; this was served on 11 December. The defendant contended that this was one day too late, since the seven-day period ran from the date upon which the adjudication notice was issued, and it had therefore expired on 10 December. The defendant submitted that this requirement was mandatory in order to comply with section 108(2)(b).
Held: The claim was allowed.
The requirement imposed by section 108(2)(b) was not mandatory, and its language was not rigid. It set a minimum requirement for the contract: it was obliged to allow a referring party, if it so chose, to issue a referral notice within the prescribed seven-day timescale. Its language required contractual machinery that enabled the referring party to refer the dispute within seven days of the adjudication notice, but it did not prohibit the inclusion in the contract of a mechanism that enabled a referral to be made outside that timescale if the referring party so chose. Accordingly, in the light of the claimant’s compliance with the adjudicator’s procedural direction with regard to service of the referral notice, that notice had been served in time, and the subsequent adjudication and resultant decision were not invalidated.
The adjudicator had erred in failing to consider the existence or value of alleged defects in the work carried out by the claimant, since the dispute referred to him should have involved, had it been considered in full, a consideration of those matters. However, those errors came within his jurisdiction and his decision was valid and enforceable. The defendant, could, if it so wished, start a new adjudication to resolve the dispute over defects.
Rowan Plantrose (solicitor-advocate) of Davies Arnold Cooper appeared for the claimant; Robert Evans (instructed by Goodman Derrick) appeared for the defendant.
Sally Dobson, barrister
