Residential occupiers and adjudication—was there an adjudication clause?

Andrew Bartlett QC declined to order enforcement of an adjudication decision against employers who were residential occupiers, there being sufficient doubt as to whether or not the parties had entered into a Joint Contracts Tribunal (JCT) Minor Works form of contract (and therefore as to whether there was a binding adjudication clause) to create a ‘real prospect’ that the defendant homeowners would successfully defend the claim if it proceeded to trial. Daniel Churcher of 4 Pump Court Chambers, considers the judgment and its implications.

Practical implications of Goldsworthy v Harrison 

The case serves as a reminder that although adjudication enforcement proceedings have their own special procedure in the Technology and Construction Court (TCC), they remain fundamentally applications for summary judgment, and the party seeking to enforce must overcome the high hurdle (in CPR 24.2) of demonstrating that the defendant has no real prospect of successfully defending the claim.

If, as here, there is no automatic right to adjudicate, and there is real doubt as to whether the parties entered into a contract containing an adjudication clause, it will be possible for a defendant to show that they have a 'real prospect' of defending enforcement proceedings at trial, and the usual enforcement procedure can be frustrated. Parties in those circumstances should give careful consideration over whether to start an adjudication at all, as if it is not possible to enforce by way of summary judgment, then the whole exercise is likely to be a wasted effort.

Facts

The defendants appointed a firm of architects to act for them in relation to certain works at their home. The architects drew up a schedule of works and procured a quotation from the claimant builders. There was discussion shortly after works started that indicated that the parties planned to enter into a JCT Minor Works form of contract (edition unspecified). Discussions around price and scope of works continued, and in fact the parties never formally executed any written agreement.

The defendants were residential occupiers within the meaning of section 106 of the Housing Grants, Construction and Regeneration Act 1996, such that there was no statutory right to adjudicate. The JCT Minor Works form does contain an adjudication clause, applying the Scheme in its entirety. The claimant had succeeded in an adjudication seeking payment of a sum certified on an interim basis by the defendants’ architects (plus certain other invoices), and now sought to enforce that decision. The defendants resisted enforcement on the basis that the adjudicator had no jurisdiction, there being no adjudication clause binding the parties, and further that the dispute between the parties had been overtaken by the issue of a final certificate by the architects.

The question for the court then was whether the parties had entered into a contract on the JCT Minor Works form by conduct. The judge was clear that the parties intended that they would enter into such a JCT Minor Works contract, and certain communications by their architects (who were taken to be the defendants’ agents for this purpose) suggested that they regarded themselves as having done so. There were also features of the parties relationship which suggested that they had not entered into a JCT Minor Works form of contract—the way in which payment was applied for by the claimant and certified by the defendants’ architect was inconsistent with the payment provisions in the Minor Works form, and when, eventually, the claimant was presented with a written contract to sign, some 15 months after works commenced, they declined to do so.

Had the parties entered into a contract by conduct?

The judge was open to the idea that the parties had entered into a JCT Minor Works form by conduct, particularly given that it was clear that the parties had intended they would contract on that basis. He said (at para [17]):

When parties intend that they will contract on a Minor Works form, but fail to complete it, the Court needs to be wary of imposing on them a less complete contract, with a different balance of risks partly reflecting the Minor Works form and partly inconsistent with it: a contract which, if asked, they would not have agreed to. However, this does not prevent a finding, if justified by the evidence, that the parties did in fact choose to bind themselves contractually on the basis of an incomplete package.

Despite what might be read as a preference for finding that the parties had contracted in the way they intended they would contract, the judge concluded, it is suggested correctly, that ‘without fuller evidence’ it was ‘impossible for [him] to say that there is not a triable issue on the question of whether the parties did or did not reach a stage where they agreed with contractual effect to the application of the Minor Works terms.’

Had the dispute been superseded by the issue of a final certificate?

The judge dealt with this issue briefly, stating that whatever sum was stated to be due under the final certificate was a separate issue from the sum required to be paid pursuant to the interim certificate. This is conventional analysis, and consistent with the decision of Ramsey J in William Verry.

The judge also found though that it was right that the adjudicator treated the final certificate as being of ‘little weight’—it is respectfully suggested that this finding has the potential to confuse. Analysed correctly, the final certificate should have been given no weight at all. In the absence of a pay less notice, a sum stated as due on an interim certificate or interim application must be paid by an employer without any further enquiry into the actual value of the works carried out (see ISG v Seevic) and it is difficult to see what relevance the subsequent issue of a final certificate could have in those circumstances.

 

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