William Verry (Glazing Systems) Ltd v Furlong Homes Ltd [2005] EWHC 138

This summary was provided by CMS Cameron McKenna LLP.

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

A party was not bringing a new claim by submitting a Response to the Referral Notice which included a claim for an extension of time for a period that was greater than it had indicated prior to the issue of the Adjudication Notice.  In any event, the Adjudication Notice was drafted so broadly as to give the adjudicator jurisdiction to hear the dispute.

His Honour Judge Peter Coulson QC, Technology and Construction Court

13 January 2005

The Claimant ("Verry") was appointed by the Defendant ("Furlong") as a design and build contractor.  Completion was due in late 2003 but in the event did not take place until the end of July 2004.  Furlong granted Verry two extensions of time to 2 February 2004 but Verry maintained they were entitled to a further extension.  Prior to the commencement of the adjudication Verry submitted a claim for an extension of time up to 24th June 2004, together with their final account claim.  Furlong denied the claim for a further extension of time and Furlong claimed that they had overpaid Verry by some £143,898.15 and requested the repayment of this sum.

Furlong commenced an adjudication on the basis of the disputed final account.  The Adjudication Notice stated, amongst other decisions sought, that: "The Adjudicator will be requested to decide that the extension of time granted by Furlong to the 2nd February 2004 is correct…", and to decide the Final Account figure, taking into account all variations, loss and expense payments, liquidated damages and direct loss arising from the delay.

In their Response to the Referral Notice, Verry included a claim for an extension of time to 27th July 2004 (as opposed to its previous claim for an extension up to 24th June 2004).  Furlong objected that this was a new extension of time claim which should have been submitted to Furlong for consideration under the contract.  It was, Furlong contended, outside the adjudicator's jurisdiction.  However, the adjudicator ruled that he did have jurisdiction and found that Verry were entitled to an extension to 27th July 2004.  Verry applied to the Court for a declaration that the adjudicator's decision was valid and binding upon the parties.

The Judge found that Verry's Response to the Referral Notice did not include a new claim but was instead a fuller explanation of the original claim advanced prior to the issue of the Notice.  The fact that a new extension date was sought simply reflected the fact that work continued on site after Verry had first outlined its case.  The Judge paid particular regard to the fact that the events relied upon in the Response were essentially the same events Verry had relied upon prior to the Notice, albeit with longer delay periods ascribed and sometimes with further supporting information. 

In any event, the Judge found that even if he accepted that the claim was a new claim, the scope of the Adjudication Notice was so wide that the adjudicator would have been entitled to consider it as it clearly formed part of the dispute that had been referred to him.  He noted that the neither the original Notice nor the Referral did anything to restrict the extension of time claim to be considered by the adjudicator, and that Verry were entitled to defend themselves as best they could.  As he put it, "Having made a general and unqualified request to the Adjudicator to decide the question of the extension of time, Furlong cannot now complain because, in seeking to defend themselves, Verry have raised a variety of matters which (on Furlong's approach) are new".

These circumstances, the Judge found, were far removed from the situation in Edmund Nuttall Ltd v R G Carter Ltd (which in any event he found had not been followed in a number of cases), in which the Court had found that a dispute did not crystallise in circumstances in which the referring party had brought up wholly new events as being the cause of critical delays.  In this instance, the Judge followed the reasoning in Cowlin Construction v C.F.W Architects (2003), that the courts should construe the word "dispute" widely.

The jurisdiction challenge therefore failed.  The Court also robustly rejected Furlong's contention that there were procedural irregularities in the adjudicator's decision.  The fact that the adjudicator had indicated that it was not possible, in the time allowed to him, to give a "full analysis" of all the material, and his decision was therefore based on an "objective overall view of events, causes and effects", was not open to criticism by Furlong who had chosen adjudication as the forum for determining the Final Account.

Finally, the Judge accepted that if an adjudicator runs out of time and cannot produce a fair decision within the statutory time limits he must not go on and make an unfair decision.  However, he rejected any suggestion that, in this case, the adjudicator's decision was unfair. 

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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