Mott MacDonald Ltd v London & Regional Properties Ltd [2007] EWHC 1055 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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An adjudicator’s decision on a dispute arising from a letter of intent was unenforceable because the letter of intent did not constitute a contract in writing/evidenced in writing for the purposes of s.107(2) of the HGCRA.  The adjudicator’s decision was also procedurally flawed because he withheld delivery of the decision for 6 calendar days pending receipt of his fees.

HH Judge Thornton QC – Queen’s Bench Division, Technology and Construction Court

Background

Mott MacDonald (“MM”) was approached by LRP to provide consultancy services in relation to a business park development.  MM was initially instructed under a letter of intent pending final agreement between the parties.  The letter of intent was subject to various extensions, but a formal contract itself was never entered into.  A dispute regarding MM’s fees was referred to adjudication.  LRP challenged the adjudicator’s jurisdiction on the grounds that there was not a construction contract in writing/evidenced in writing for the purposes of s.107(2) HGCRA.  The adjudicator found that he did have jurisdiction and decided against LRP on the substantive issue - MM’s fees were payable by LRP. 

Once the adjudicator had reached his decision, he delayed its delivery to the parties pending receipt of his fees from the referring party – this resulted in a delay of six calendar days (four working days).  The decision was issued by the adjudicator on the last day on which he could issue that decision, but only received by the parties the following day.

Issues

MM brought an application for summary judgment to enforce the adjudicator’s decision.  The TCC was called upon to decide:

a)  whether the adjudicator had jurisdiction to decide the dispute.  In particular, was the letter of intent a contract in writing within the meaning of s.107(2) of the HGCRA?  If not, had the parties voluntarily submitted to the jurisdiction of the adjudicator?

b) whether the decision of the adjudicator as to his jurisdiction was unreviewable because LRP was seeking to challenge errors made within his jurisdiction.

c) whether the decision was procedurally flawed due to the delay in delivery of the decision by the adjudicator pending receipt of his fees.

Decision

Firstly, HH Judge Thornton QC found that the letter of intent had been subject to substantial amendments that were partly evidenced in writing.  The agreement was not an agreement in writing nor evidenced in writing pursuant to s.107(2). For that reason, the HGCRA did not apply and, in the absence of an express adjudication clause, the adjudicator had no jurisdiction to decide the dispute.

Secondly, an adjudicator may not determine his own jurisdiction unless he has been specifically appointed by the parties for that purpose.  The letter of intent did not contain an adjudication clause and the parties had not voluntarily submitted the dispute to adjudication.  The decision reached by the adjudicator regarding his own jurisdiction to hear the dispute was therefore reviewable by the courts.  The judge found that the adjudicator was found to have made an error of law and therefore the decision was not binding.

Finally, the judge commented that an adjudicator may not refuse to deliver his decision pending payment of his fees. Under the adjudication framework in the HGCRA, the adjudicator is under a duty to deliver his decision as soon as it is finished and, in any event, to deliver it before the relevant period for reaching that decision has expired.  Even if the adjudicator’s decision had not been unenforceable for lack of jurisdiction, this procedural flaw would have rendered it non-binding.

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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