Lafarge (Aggregates) Ltd. v London Borough of Newham [2005] EWHC 1337 (Comm)

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An adjudicator's decision, when issued by email, will (subject to any express terms of the contract) be taken as given on the date it was emailed, even though it had not been signed. Further, the issue of an adjudicator's decision would not be subject to provisions under the contract governing service of 'Notices'. In absence of any definition in a contract, the court held that the expression 'working day' meant an ordinary office working day even where there was evidence to suggest that the potential working hours of the contractor would include Saturdays.

Commercial Court, London

Mr Justice Cooke

24 June 2005

In June 2001 the London Borough of Newham ("LBN") employed Lafarge (Aggregates) Limited ("Lafarge") to provide certain construction services over a three-year period. The contract provided a framework for effecting minor civil engineering works for LBN as instructed from time to time. A dispute arose between the parties concerning the proper valuation of Lafarge's work. The contract provided Lafarge with the right to refer this dispute to adjudication, which it did on 7 July 2004. On 12 August 2004 the adjudicator sent by fax to the parties the draft wording of his decision. The following day the adjudicator sent the parties an email attaching a letter and a document entitled 'Adjudicator's Decision', both of which were dated but not signed. The hard copy of the decision (which was signed and dated) was also sent to the parties by post on 13 August 2004. However, LBN said that it did not receive the hard copy of the decision until 17 August 2004. On 11 November 2004 a letter, enclosing a Notice to Refer that purported to refer the issue to arbitration, was sent by recorded delivery on behalf of LBN to Lafarge's registered office. The contract required a Notice to Refer to be served within three months of the adjudicator's decision of 13 August 2004. A date stamp on the letter recorded the fact that it had been received at Lafarge's office on 12 November 2004.

Lafarge contended that the letter and Notice to Refer had been served out of time. It said that the arbitrator did not therefore have jurisdiction to hear the dispute. The arbitrator found that the adjudicator had given his decision on 13 August 2004 (the day on which it was sent and received by email). The arbitrator agreed with Lafarge that the Notice to Refer had to be served within three months of 13 August 2004. He said that the terms of the contract meant that service of the Notice to Refer was not effected until two working days after it had been sent. The arbitrator accepted LBN's submission that Saturday was a working day for the purpose of the contract. He therefore concluded that the Notice to Refer was served on Saturday 13 November 2004 which was within three months of the giving of the decision of 13 August 2004.

Lafarge applied to challenge the arbitrator's decision under section 67(1)(a) of the Arbitration Act 1996. The first issue that the court had to consider was on what date the adjudicator gave his decision. The court noted that the parties had been corresponding by email during the adjudication without objection and the court held that, in absence of an agreed procedure for communicating the decision, the adjudicator was free to communicate his decision in any way he chose. Further, the court held that it was plain from the terms of the letter, decision and the email all dated 13 August 2004 that the adjudicator was publishing his decision that day and that he considered himself 'functus officio' from that point onwards. It said that is was clear that the decision was given by email on 13 August 2004 despite the fact that it was not signed when sent by that method. LBN's alternative position was that the adjudicator's decision should be treated as a 'Notice' issued under the contract, and therefore deemed to be served two days after posting, however the court did not agree with this argument both on the basis that the clause dealing with service of notices did not cover the giving of adjudicators' decisions and for policy reasons. 

Secondly, having decided this, the court then had to consider on what date the Notice to Refer was served. The court said that in the case of any notice to be given by Lafarge, such notice had to be served pursuant to the contract by either post or by leaving the notice at its registered office. What is plain, it said, is that whichever method of service is adopted the contract stated that notice shall be deemed to be served two working days following service. The court observed that 'the words "deemed to be served" are not included in the Clause in order to provide a fallback position if it cannot be shown when the Notice was received: nor do they give rise to the possibility of rebuttal by evidence as to the time of actual receipt'. Therefore the fact that Lafarge had in fact received the Notice to Refer on the day after posting (within the 3 month period) was irrelevant, what was important was when the 2 working day period from posting expired.

The third issue that the court had to consider was whether or not Saturday 13 November 2004 (i.e. two days after the Notice to Refer was sent on Thursday 11 November 2004) was to be treated as a working day. If it was not, then the court said that the two working days following the sending of the Notice on Thursday 11 November could not expire until some time on Monday 15 November (assuming that Sunday was also to be treated as a non-working day, as the parties agreed it was). The term 'working day' was not defined in the contract. LBN contended, amongst other things, that as the permitted working hours in the specification included the hours of 07:00 to 14:00 on Saturdays, then a Saturday should be treated as a working day. Lafarge argued that what mattered was the working hours of the offices of both of the parties and that neither Saturday nor Sunday counted as working days since neither Lafarge's nor LBN's offices were open then. The court disagreed with the arbitrator's decision on this point. It said that if Saturdays had been included on the basis of when contractors could work, then Sundays could too. That, it said, would deprive the phrase 'working days' of any meaning, save in the context of bank holidays. The court said that it was reluctant to turn to obscure parts of the contract appendices, such as the specification, to seek to ascertain the meaning of 'working days' when the concept was intended to be a simple one. There was no suggestion by either party, the court said, that there was any customary meaning in the construction industry or any usage which could change the literal meaning of the expression, whether or not contractors often work at weekends. The court concluded that the expression 'working day' meant an ordinary office working day.

As Saturday 13 November was not a working day, two working days could not expire on that day. The court therefore said that the earliest time which the Notice could be treated as effective would be sometime on Monday 15 November, which was more than three months from the date that the adjudicator gave his decision on 13 August. The consequence of this, the court said, was that the arbitrator had no jurisdiction since the reference to him was not made in time in accordance with the provisions of the contract.

This summary was provided by CMS Cameron McKenna LLP.

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