REUTERS | Yuriko Nakao

Do you have a construction contract?

Do you have a construction contract?” Unsurprisingly, this often-asked question is the starting point for deciding whether a party has a right to refer a dispute to adjudication.

If one party is a residential occupier, there can only be an adjudication if the parties have a contractual right to refer a dispute to adjudication. There can only be a contractual right to refer if there is a contract.

The recent case of Rupert Cordle v Vanessa Nicholson, unreported, 6 April 2009, reminded me of the perils for parties who do not properly enter into a contract, especially if the “employer” is a residential occupier.

In this case, Nicholson (the employer), through her agent, provided Cordle (the contractor) with a JCT standard form minor works building contract 1998. The agent said he’d “fill in the detials” and act as the contract administrator. Nothing was ever signed. Later, the contractor referred to the 2005 version of the standard form and then, allegedly, denied there was a contract at all. This didn’t stop him from referring a dispute with the employer to adjudication, with the RICS as the nominating body.

The adjudicator did not resign, when invited by the employer to do so. Instead he reached a decision, which the contractor sought to enforce. At the enforcement hearing, the judge (Mr Justice Teare) said that it wasn’t clear whether there was a contract, or whether one could be inferred, without a detailed analysis of the course of dealing between the parties: a summary judgment application was not the time or place for this sort of review of the evidence. He declined to enforce the decision, saying there must be a trial of the issue of the adjudicator’s jurisdiction. (He also suggested the adjudicator had failed to consider the employer’s counterclaim, and that that was reason enough not to enforce.)

And the moral of the story?

  • There are enough arguments available to the parties to try and avoid enforcement of an adjudicator’s decision. Don’t add to the list, with issues over the contract.
  • Contracting parties, big and small, should ensure all the paperwork is in order if they want their contract to be a construction contract, giving them a right to refer a dispute to adjudication.
  • Be particularly careful if you are contracting with a residential occupier, or other party whose works are expressly excluded from the ambit of the Construction Act 1996.

Will things be different if the Construction Act 1996 is amended?

Not for parties who contract with residential occupiers. “Construction contracts” may no longer need to be in writing (the proposed deletion of section 107), but there is no suggestion that the current exclusions will change.

 

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