Treasure & Son Ltd v Dawes [2007] EWHC 2420 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

An oral variation to a construction contract (to which the HGCRA did not apply because it related to a residential development) was held not to, of itself, undermine the contractual adjudication process or preclude the adjudicator from having jurisdiction. Furthermore, the lack of signature on the adjudicator’s decision did not invalidate that decision.

Mr Justice Akenhead – Queen’s Bench Division, Technology and Construction Court

Background

Treasure was appointed to carry out refurbishment and restoration works at Dinmore Manor by Mr Dawes under a contract incorporating the JCT Standard Form of Prime Cost Contract (1998 Edition with amendments 1 and 2). Practical Completion of the works was certified in December 2004, however Treasure remained on site completing a substantial amount of outstanding works and putting right various alleged defects between December 2004 and February 2007.

A dispute subsequently arose in relation to the amount that Treasure was entitled to claim for the works carried out after the Practical Completion certificate. The dispute was referred to adjudication pursuant to the contract (the HGCRA did not apply because the construction contract related to a residential development). The adjudicator ordered Mr Dawes to pay Treasure in excess of one million pounds, as well as the adjudicator’s fees. Mr Dawes did not comply with the decision, therefore Treasure applied to the court for summary enforcement.

Issues

Mr Dawes sought to defend the application for summary judgment on three grounds. He argued that:

There had been an oral variation of the written contract and as such it was not a contract “in writing”, therefore the adjudicator had no jurisdiction.
The adjudicator’s decision had not been signed by the adjudicator therefore it was not binding on the parties.
Even if these arguments failed and judgment was awarded against him, there should be a stay of execution given the current financial position of Treasure and his fear that he might never see his million pounds again if he persuaded an arbitrator that the adjudicator had been substantially wrong.

Decision

First, Mr Justice Akenhead held that, where there was a contractual agreement to adjudicate, the adjudication process was not undermined by the fact that terms of the original contract had been orally varied; unless it was an express term of the contract that oral variations would only be valid if recorded in writing, an oral variation would not compromise the adjudicator’s jurisdiction to decide the dispute. In any event, the judge was not satisfied that the parties had orally varied the terms of the original contract.

Secondly, there were no express words in the contract making it clear that the adjudicator must sign his decision. The need for a signature could only arise as a matter of contractual implication. It was neither reasonable nor necessary to imply such a term: provided it could be demonstrated that the decision was that particular adjudicator’s decision (which it could), then the decision would be binding on the parties.

Finally, Mr Justice Akenhead held that there should be no stay of execution on the ground of probable inability to repay, because there was no evidence to suggest that Treasure would not be able to repay any sums ordered to be repaid by an arbitrator at a later date.

For these reasons, the court gave summary judgment.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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