Brown (L) & Sons v Crosby North West Homes 2005] EWHC 3503 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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

This is a case looking at the scope of the adjudicator’s jurisdiction under the JCT Contract 1998 form.   There was a discrepancy between clause 5 (which gave the parties the right to refer disputes to adjudication) and clause 39A.1 (which dealt with the adjudication procedure itself): the former referred to disputes arising “under” the contract, whereas the latter had been amended so that it read “under, out of or in connection with” the contract.  Notwithstanding the absence of the words “out of or in connection with” in clause 5, the court found that the parties had intended to extend the adjudicator’s jurisdiction to cover disputes arising out of or in connection with the contract. 

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

Background


Crosby appointed Brown to build 114 residential apartments in Manchester, under the JCT 98 form incorporating amendments.  The parties later varied the construction contract with two side agreements, one relating to a waiver of liquidated damages and one in relation to a completion bonus.  A dispute arose under the side agreements, which Brown referred to an adjudicator. 

Crosby disputed the jurisdiction of the adjudicator.  The adjudicator found that he had jurisdiction.  In terms of the substantive dispute, he reached the conclusion that Crosby was not entitled to deduct liquidated damages from an interim payment and that Brown was also entitled to payment of an agreed completion bonus.  Crosby then challenged the jurisdiction of the adjudicator in the courts.  Simultaneously, Brown applied for enforcement of the adjudicator’s decision.

Issues

Clause 5 of the JCT contract provided the parties with the right to refer disputes under the contract to adjudication.  Clause 39A.1, which set out the procedure for referring the dispute, had been amended by the parties so that this right was extended to disputes arising under, out of or in connection with the contract.  Crosby contended that clause 5 conferred the right to adjudicate upon the parties and that clause 39A.1 could not broaden the scope of that right.  For this reason, the adjudicator did not have jurisdiction to decide the dispute.  Mr Justice Ramsey disagreed.  He found that it was plain that the parties had intended to broaden the scope of the right to cover disputes arising “out of or in connection with” the contract.

Although the side agreements did not in express language refer to particular clauses in the contract, the judge found that the introduction of a bonus scheme and the waiver of liquidated damages amounted to a variation of the JCT contract.  For this reason, the dispute referred to adjudication had arisen under, out of or in connection with the contract – the adjudicator had jurisdiction to decide the dispute and his decision was enforced.

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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