Buxton Building Contractors Ltd v Governors of Durand Primary School [2004] EWHC 733

This summary was provided by CMS Cameron McKenna LLP.

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

Whilst an adjudicator is perfectly entitled to direct that given the nature and size of a dispute it is better dealt with by way of written submissions alone, he must himself ascertain the applicable facts and law. It is incumbent on him to identity fully all the issues that have arisen and to consider the submissions of both the disputing parties. A failure to do so may render his decision invalid both because he may fail to decide the dispute referred to him and because his decision may be intrinsically unfair.

Judge Anthony Thornton QC, Technology and Construction Court

12 March 2004

A JCT contract was entered into whereby Durand Primary School (the "School") engaged the contractor Buxton Building Contractors Limited ("Buxton") to construct a new residential block at the School in South London. Throughout the construction process and subsequent to practical completion, the School alleged that there were a number of defects in the construction works. As a result of what the School claimed were inadequate responses by Buxton to its complaints concerning the defects, the School had to call out its maintenance team to remedy the defects on numerous occasions. From the outset, the School maintained that it was entitled to be reimbursed for all of the costs that it had incurred.

By the middle of 2003 it was clear to the Contract Administrator (CA) that although the defects had now been remedied, the School had a substantial outstanding monetary claim relating to the defects. The CA therefore believed that it would be inappropriate to issue the Final Certificate (which would have the effect of releasing the final tranche of the retention money) until the extent of how much the School should receive by way of damages for the defects had been resolved. The School was advised to, and subsequently did, issue a withholding notice which notified Buxton that it would withhold the value of its claim from the retention money. The CA subsequently issued an "interim certificate" relating to the release of the retention. However, under the terms of the contract, the CA was not authorised to issue an interim certificate after the date of practical completion. The contract provided only for the release of the final tranche of the retention money on the issue of the final certificate. The certificate was therefore issued outside the scope of the contract. Following the issue of this certificate, the School wrote to the contractor providing details of the nature and amount of the claim it intended to withhold. Buxton subsequently issued an invoice for the outstanding sums and followed this by a notice of adjudication.

In Buxton's referral notice, it claimed that the dispute was a simple one regarding payment. The adjudicator replied that he would receive written submissions from both parties and any relevant documents. Having reviewed these he would then decide the dispute without either a hearing or a meeting. The School, which was not legally represented, adhered to the adjudicator's request and submitted copies of all the correspondence. Buxton's representatives responded to this in a written submission to the adjudicator. They said that the adjudicator should not have regard to the information provided by the School on the basis that it was irrelevant as no valid withholding notice had been served. No submission was made by Buxton as to the merits of the School's claim.

The adjudicator, in deciding in favour of Buxton, decided that the sum that was being claimed was due pursuant to a validly issued interim certificate, that no withholding notice had been served and that the CA must be presumed to have taken the School's claim into account in computing the sum being certified as due. The School refused to pay and Buxton applied to the courts to enforce the decision.

In the enforcement proceedings, the School argued that under paragraphs 17 and 20 of Part I of the Schedule to the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649) the adjudicator was obliged to consider all relevant information submitted to him by any party to the dispute and to decide all matters in dispute. It was clear from the adjudicator's decision, the School argued, that the adjudicator had not done this and therefore the decision was unfair and ought not to be enforced. Conversely, Buxton argued that whether or not the adjudicator's decision was erroneous (which was not conceded), it was still a valid decision whose errors were ones within the adjudicator's jurisdiction and therefore should not render the decision unenforceable.

In dismissing the summary judgment application, the court accepted the School's view that the decision was both intrinsically unfair and unenforceable. Although the court accepted that given the nature and size of the dispute it was a reasonable direction for the adjudicator to give that the matter should be dealt with by written submissions alone, "given that the School was not legally represented and given the need for [the adjudicator] to himself ascertain the applicable fact and law [it was] incumbent on him to identify fully all the issues that had arisen that he had to decide and then to decide them." The judge held that it was clear from the adjudicator's decision that this had not been done. The adjudicator failed to fulfil his statutory duty to decide the dispute referred to him (as he only considered the part of the dispute referred to him by the contractor) and failed to consider the representations of the School (as he had failed to review the documentation provided to him by the School). These amounted to serious irregularities in the adjudication process.    

In conclusion, the court held that the adjudicator's decision was "one which potentially exceeds the adjudicator's jurisdiction, has potentially been reached in breach of his statutory obligations and is, in a public law sense, sufficiently unfair as to lack enforceable validity".   

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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