Legal Updates

Commercial – Adjudication – Decision Out of Time

The claimant in the case of Epping Electrical Company Ltd v Briggs and Forrester (Plumbing Services) Ltd [2007,] was a sub-sub-contractor to the defendant on a construction project. The contract between the parties provided that adjudications were to be in accordance with the CIC procedure (third edition).

A dispute arose between them in which the adjudicator, on 8 November 2006, sought an extension up to 21 November in order to reach his decision. The claimant consented to this. On the same day, the defendant agreed with the proviso that the decision had to be ‘issued’ by then.

On 21 November, the adjudicator notified the parties that he had completed his decision and enclosed an invoice for half of his fees to each party. He stated that he would issue his decision upon receipt of payment. Both parties disagreed that the adjudicator was entitled to withhold his decision and reserved their respective positions in relation to the late delivery of the decision.

The adjudicator subsequently released his decision on 23 November. His decision found in favour of the claimant. The claimant subsequently brought proceedings to enforce this award and applied for a summary judgment. The defendant contended, however, that it had consented to extend time to 21 November on the condition that the decision should be issued by that date. As that condition had not been complied with, the adjudicator's decision had been reached out of time.

The claimant argued that the reaching of a decision was not to be distinguished from its delivery. The basis for this argument was that there was no such distinction in the Housing Grants, Construction and Regeneration Act 1996 or the CIC procedure. It submitted that the decision had been reached within the time agreed by the parties and that the time limits in s.108(2) of the Act for an adjudicator to reach his decision were not mandatory. The claimant further relied on paragraph 25 of the CIC procedure. The procedure stipulated that an award reached out of time remained effective provided it had been reached before the matter was referred to another adjudicator.

However, an issue arose as to whether paragraph 25 of the CIC procedure was inconsistent with s.108(2) of the Act such that the Scheme for Construction Contracts, as set out in the Schedule to the Construction Contracts (England and Wales) Regulations 1998, was applied to the contract by the operation of s.108(5) of the Act.

The court held:-

  • That there was a distinction between the reaching of a decision by an adjudicator and its delivery to the parties.
  • The court considered Scottish jurisprudence, in that the time limits in s.108(2) of the Act were mandatory in nature. As the effect of paragraph 25 of the CIC procedure was inconsistent with it, the Scheme applied in place of the adjudication provisions of the contract by the operation of s.108(5).
  • The court also held that it would be ‘a recipe for confusion and uncertainty’ if two competing sets of adjudication provisions were to apply to a contract where s.108(5) of the Act was engaged.
  • This could not have been the intention of Parliament.
  • On the evidence, the defendant had consented to an extension of time up to 21 November for the adjudicator to reach his decision upon the condition that the decision was issued by that date.
  • That condition had not been fulfilled and therefore the adjudicator had reached his decision out of time.
  • It followed that the decision was not enforceable.

    Please contact us for more information on assessing damages due under termination of a contract at enquiries@rtcoopers.com.

     Visit http://www.rtcoopers.com/practice_corporatecommercial.php; or http://www.rtcoopers.com/practice_corporatefinance.php

    © RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

 

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