Practical Law

I recently learned that the Technology and Construction Court (or, more precisely, the Official Referees’ Court as it was known until 1998) will soon celebrate its 150th birthday, having started life in 1873.

No birthday would be complete without a birthday list of long-desired gifts but, as a public body staffed by public servants, there is little point in trying to think of what presents we could give as they couldn’t be accepted anyway. Rather, I decided to come up with a list of presents that the TCC could give us, the construction law community, and it’s in the form of issues that I would like to see decided by the court before its landmark birthday.

What I have in mind are the types of issues we see crop up in adjudication, as well as arbitration and litigation, where there are arguable grey areas in the current case law, or no case law directly on the point. Here’s my first crack at the list (and I’ve left room for you to insert your issue of choice too).

Where the time and money risk lies for delays caused by COVID-19

We all know that, following the introduction of adjudication in 1998, TCC business has changed significantly and there are fewer full trials generating case law. Few would argue with the success of adjudication but, when it comes to the question of where the time and money risk lies for delays caused by the COVID-19 pandemic, this is one of those occasions where many practitioners would like to see the merits dealt with in detail by the TCC, preferably a lot sooner than 2023.

I appreciate that this will not be a simple answer. Rather, it will depend on where the responsibility lies under the contract, if the contractor ceased work altogether then whether it was instructed to do so or did so by its own accord, the relevant guidance from the Construction Leadership Council at the time, etc. However, a judgment dealing with this issue, particularly if it concerned one of the more widely used standard forms of contract, would no doubt be warmly welcomed by the industry. This is particularly the case as my impression is that some of the flexibility and goodwill shown by parties concerning delays arising from the first national lockdown has not necessarily been carried forward into later lockdowns.

The interim valuation/ final account jurisdictional arguments

This jurisdictional argument is as old as the Construction Act 1996 itself but, to the best of my knowledge, it’s not been dealt with directly by the TCC (I’m happy to be corrected if any of our wonderful readers can think of a case). The argument arises when an adjudicator has dealt with a true value dispute under one or more interim valuations, and then there is a further adjudication about the true value of the final account.

Party A (unsurprisingly, the party that is unhappy about the outcome of the interim valuation adjudication) argues that the slate has been wiped clean as it is a final account adjudication. It says that if the contract administrator, employer’s agent and so on, are not bound by previous interim valuations, then why should the adjudicator be bound?

Conversely, Party B (you’ve guessed it, the party happy with the interim valuation adjudication) argues that the adjudicator does not have jurisdiction to deal with all or part of the final account dispute because they are bound by the previous decisions on matters that could encompass measured works, variations, loss and expense and so on. It says that otherwise the adjudicator would be deciding the same dispute, and we all know that an adjudicator’s decision is binding until the dispute is finally determined by legal proceedings, by arbitration or by agreement. Party B goes on to say that if an adjudicator has already decided, say, the value of a variation in the interim valuation adjudication, how can they decide it again based on the same arguments and evidence but under the auspices of the final account?

I’ve dealt with such jurisdictional arguments previously and I’ve always come to the same non-binding conclusion. However, I make no apologies for fence-sitting and not revealing which way I’ve gone because I don’t rule out the possibility of coming to a different conclusion in the future, depending on a range of factors. In the past, parties have referred me to the findings in the interim valuation adjudications and the declarations given. For example, I’ve come across other adjudicators making declarations for “interim valuation purposes”, although some would argue that this makes no difference. I have also been referred to the relevant provisions in the contract, whether the final account adjudication is dealing with the same issues, the extent of new submissions and evidence, and so on.

Despite all of these different factors, I would like to see the TCC grapple with the interim valuation/ final account argument head on.

The applicability of the Fiona Trust to adjudication agreements

To briefly recap, in Premium Nafta Products Ltd (20th Defendant) and others v Fili Shipping Company Ltd and others (commonly known as Fiona Trust v Privalov), the House of Lords did away with the distinction between “disputes arising under the contract” and “disputes arising in connection with the contract” in respect of arbitration agreements.

The question is therefore whether the same principle applies to adjudication and, in my view, it does (I’ve nailed my colours to the mast on this in previous blogs so there is no point in fence-sitting this time). Sir Robert Akenhead dealt directly with the point in J Murphy & Sons Ltd v W Maher and Sons Ltd (which I discussed at the time) and, in my view, the final nail in the coffin was given in the Supreme Court’s judgment in Bresco Electrical Services v Michael J Lonsdale (which I also blogged about last year).

However, that was before I read Myron Phua’s second prize winning paper in the 2020 SCL Hudson Prize competition, which will be published later this year. While not giving away the contents of the paper, the title, The proper case for the inapplicability of Fiona Trust to statutory adjudication after Bresco, is self-explanatory. Although I still consider that Bresco has resolved the point, it would be helpful if the TCC could deal with the issue so there is clarity once and for all.

The friction between S&T v Grove and M Davenport Builders v Greers

There was no ambiguity in Sir Rupert Jackson’s conclusion at paragraph 107 of the Court of Appeals’ judgment in S&T (UK) Ltd v Grove Developments Ltd that:

“… both the Act and the contract must be construed as prohibiting the employer from embarking upon an adjudication to obtain a re-valuation of the work before he has complied with his immediate payment obligation.”

To my mind, this clearly meant that payers had to pay a notified sum in accordance with section 111 of the Construction Act 1996 before referring a true value dispute to adjudication regardless of the fact that this might be a fetter on the right to adjudicate at any time.

However, in M Davenport Builders Ltd v Greer and another, Stuart-Smith J (as he was then) appeared to find that such a true value adjudication could be commenced, but the decision could not be relied upon until the initial payment has been made. In my blog on the case at the time, I questioned whether S&T v Grove had been diluted.

Although O’Farrell J touched on this point in Kew Holdings v Donald Insall Associates (which I also discussed at the time), in my view further clarification is needed by the TCC or one of the higher Courts to put the matter to bed.

[Insert issue of your choice here]

Over the years I’ve regularly thought there are certain issues with little or no directly applicable case law that would benefit from a TCC judgment but, rather foolishly, I have not made a note of them, hence why my list is relatively sparce. I’ll no doubt think of lots of other issues in the coming days and weeks but, in the meantime, I will leave you to continue this TCC birthday list. Hopefully I’ll return to this topic before 2023.