RMP Construction Services Ltd v Chalcroft Ltd [21.12.15]

Technology and Construction Court (TCC) holds that a dispute regarding the applicable terms in two competing construction contracts did not affect an adjudicator’s jurisdiction.

Implications

Key lessons to be learned from this decision include the following:

  • When negotiating contract terms, it is vital for the parties to ensure their preferred terms are clear, consistent and have been accepted by the other party. This will avoid potential disputes at a later stage.
  • If a construction contract does not contain a specific provision for adjudication, the Scheme for Construction Contracts (the Scheme) as laid down in the Scheme for Construction Contracts (England and Wales) Regulations 1998 will apply. Therefore, if a party wants to use a specific adjudication procedure, for example through the Royal Institute of Chartered Surveyors or the Construction Industry Council, they should ensure this is expressly stated in the contract.
  • As a matter of public policy, a court will not spend time considering the specifics of how a contract has been formed. It would be unacceptable to deprive an adjudicator of jurisdiction because of issues with the characterisation of the contract. Mr Justice Stuart-Smith emphasised that:

“the adjudication system was and is meant to provide quick and effective remedies to parties, equally accessible to those who are legally represented as to those who are not”.

Background

The Claimant carried out groundwork for the Defendant under a construction contract. However, there was a dispute between the parties as to how the contract was formed.

The Claimant argued that the contract was formed when the Defendant accepted its price breakdown via email. However, the Defendant asserted that the contract was formed either by the letter of intent or the letter of intent plus the sub-contract order and emails exchanged between the parties.

The dispute arose when the Claimant raised issues regarding payment. The Defendant asserted that, through its conduct, the Claimant had accepted the payment terms of the sub-contract order.

The parties sought to resolve their dispute through an adjudication. The adjudicator decided the full outstanding amount of £258,760.67 was owed to the Claimant.

The Claimant subsequently made an application for summary judgment to enforce the adjudicator’s award. The Defendant challenged the adjudicator’s jurisdiction.

Decision

The Claimant’s application for summary judgment was granted, meaning that it was entitled to enforce the adjudication award. Stuart-Smith J held as follows:

  • Regardless of how the contract was formed, the Scheme applied and the parties would have had the same route to adjudication.
  • Jurisdiction was dependent upon whether there was a construction contract in existence and a dispute arose in relation to it. Jurisdiction was not solely dependent on identifying the minutiae of the contract because to do so would go against the objective of adjudication.
  • The Defendant’s argument that the letter of intent formed the basis of the contract was fundamentally flawed. The letter of intent referred to a form of JCT contract which did not exist. As a result, even when read in conjunction with the sub-contract order and the email correspondence between the parties, a reasonable person would not have understood the payment terms the parties were intending to follow.
  • The Defendant also failed to put forward a positive argument as to what alternative procedure, other than the Scheme, should apply.
  • Therefore the adjudicator did have jurisdiction and was properly appointed because both parties agreed to the use of the Scheme. Although the adjudicator could have reached a different decision given the different contractual interpretations, it did not affect his jurisdiction. Any error would be an error of procedure, fact, or law, which would not prevent enforcement.