Adjudicator’s decision upheld

United Kingdom

In Mr Justice Akenhead’s third judgment since his appointment to the TCC, he upheld the validity of an adjudicator’s decision despite the alleged oral variation to the contract and the absence of the Adjudicator’s signature on the decision  .  The adjudication provisions in the Housing, Grants, Construction and Regeneration Act (“the Act”) did not apply here because one of the parties to the contract was a residential occupier; however the parties expressly provided for adjudication in their written contract.  The main points to note are as follows: 

The alleged oral variation to the terms of the written construction contract did not undermine the enforceability of the Adjudicator’s decision.

The parties were in agreement that the contract incorporated a JCT standard form and all of the terms were in writing.  The question was whether an oral variation of the contract meant the Adjudicator had no jurisdiction.  This element of the judgment highlights the long running debate in the industry as to whether the adjudication provisions of the Act should only apply to contracts that are wholly in writing (as opposed to oral or implied contracts).  This issue does not arise where, as in the facts of this case, the parties have expressly provided that adjudication shall apply.  In those circumstances adjudication will apply to both written as well as oral contracts, which would probably include oral variations to a contract as well.

The Judge upheld the enforceability of the Adjudicator’s decision stating:
 

  • Where there is a contractual agreement to adjudicate (as opposed to a right to adjudicate that is implied from statute), the parties have made a binding agreement that disputes will be referable to adjudication.  If the terms of the original contract are orally varied, the variation does not undermine the contractual enforceability of the adjudication process.  The contract would only be undermined if there was an express term of the contract that said oral variations would be valid if they were recorded or evidenced in writing.

 

  • In any event there was insufficient evidence to establish there had been a material oral variation of the contract.  There was no consideration for such an agreement, and no indication that there was a mutual intention that the contract should be varied.

 

  • In the light of the above it was unnecessary for the Judge to consider the remainder of the Claimant’s arguments as to the enforceability of the Adjudicator’s decision, however the Judge did comment on the Claimant’s argument in relation to section 107(5) of the Construction Act.  This section of the Act provides that where one party alleges the existence of an oral agreement in adjudication, arbitration or legal proceedings, and the other party in its response does not deny it, the exchange of written submissions will constitute an agreement in writing.  In this case, the Claimant argued that the Defendant’s failure to deny the alleged variation to the contract constituted an agreement in writing.  The Judge stated that, although it was unnecessary for him to decide the point, he would have accepted the Claimant’s argument.  This part of Mr Justice Akenhead’s decision will not be binding; however, it is interesting to note the developing judicial opinion on the point:

(i) Mr Justice Akenhead expressed disapproval of the decision in Grovedeck v Capital Demolition [2000] (to view our Law-Now on the case, click here) where Judge Bowsher QC decided the intention of Parliament was for s107(5) of the Act to apply only in an exchange of written submissions in preceding adjudication proceedings (it should not apply to an exchange of written submissions in any current adjudication proceedings).  Mr Justice Akenhead disagreed stating that s107(5) can apply to any adjudication proceedings (including current proceedings).

(ii) Mr Justice Akenhead’s decision on s107(5) can be contrasted with the decision of Judge Thornton QC in Mott Macdonald v London & Regional Properties [2007] (to read our Law-Now on the case, click here) who rejected the argument for the existence of an agreement in writing pursuant to s107(5).  

The adjudicator’s decision does not have to be signed

The Adjudicator wrote to the parties to enclose his decision and although he signed the covering letter, he failed to sign the actual decision.  The Defendant argued that the absence of a signature on the decision meant there was no enforceable decision by the Adjudicator.  The Judge rejected this argument stating that although it is generally desirable that decisions are signed, that does not mean that parties must have intended that decisions must be signed before they are valid.
  
Case: Treasure & Son Limited v Martin Dawes [2007] EWHC 2420 (TCC). 

Click here to view the judgment.