Adjudication is a fact of life in construction projects. So
said Mr Justice Akenhead in National
Museums and Galleries on Merseyside-v-AEW Architects ([2013] EWHC 2403).
Most construction contracts contain express adjudication
provisions. If they do not, adjudication
is still available thanks to the statutory regime introduced by the Housing
Grants, Construction and Regeneration Act 1996 as amended by the Local
Democracy, Economic Development and Construction Act 2009 (‘Construction Act’).
Under Section 114(4) of the Construction Act, where a construction contract
does not include all the adjudication provisions in Section 108 of the Construction
Act, the adjudication provisions of the Scheme for Construction Contracts
(England and Wales) Regulations 1998 (as amended) take effect.
An adjudication was the subject, in part, of a recent TCC
decision, Husband & Brown Limited v Mitch Developments Limited (2015 EWHC
2900 (TCC)). The claimant had instigated
an adjudication in order to recover a commission to which it claimed
entitlement under an agency agreement.
The claimant found potential development sites for a developer, the
defendant, in return for commission if the developer completed the purchase of
a site. There was a dispute as to the
amount of the commission. The
adjudicator found for the claimant but the defendant did not pay and the dispute
went to court.
As it happens, the claimant won; but that is not the point of
this story. The remarkable thing about
this case is how the claimant was able to take the matter to adjudication in
the first place. The Construction Act
relates to construction contracts. This was an agency agreement between a
developer and a land finder. The agency
agreement was neither an agreement to carry out construction operations nor an
arrangement for the carrying out of such.
The adjudicator was mistaken in assuming jurisdiction.
The claimant had argued that he should be entitled to the costs
of the adjudication. This argument was
based on the decision of Mr Justice Akenhead referred to above that
adjudication is a fact of life in construction projects. In his judgment there was a sufficient
causative link between the defaults of the consultant (AEW Architects) and the
adjudication and that it was within the bounds of reasonable foreseeability
that there would be adjudication in the circumstances of that case. The judge refused
to apply that test here.
She distinguished this decision to its facts and would not consider
this technical argument where there was clearly no jurisdiction in the first
place for the parties to seek adjudication under the Construction Act. The judge reasoned that to allow the claimant
to pursue a claim for recovery of costs would subvert the statutory scheme for
adjudication which does not allow recovery of such costs.
The moral? Yes we all
know and love adjudication but don’t go there unless there is jurisdiction to
do so.
By Bill Mackie, Consultant
