Walter Lilly & Co Ltd v DMW Developments Ltd [2008] EWHC 3139 (TCC)

Although an adjudicator’s decision is temporarily binding on the parties, it is thereafter open to either party to come to court for a final decision on the point considered by the adjudicator. Part 8 offers the means by which a dispute can be finally determined in a speedy and cost-effective way. It is NOT intended as a mechanism for appealing an adjudicator’s decision. A claimant who wants to avail himself of the possible short-cut of Part 8 must be able to demonstrate that the dispute in question falls within its relatively tight confines.  

Lilly v DMW: The defendant engaged the claimant to build Plot C, Bolton's Place, in Earls Court. Pursuant to that contract, the claimant was obliged to supply American Black Walnut ("ABW") natural timber veneers to various rooms in the property. A dispute arose when the ABW veneer faded and in September 2007 the defendant withheld some £90,000 from the claimant in consequence. It was and remains the claimant's case that the fading was a natural occurrence and part of the natural characteristics of the wood selected by the defendant.  

The dispute was referred to adjudication and the adjudicator decided that the veneer had faded due to exposure to natural light but his decision also noted that the fading constituted a breach of contract. The claimant argued that the particular terms of the contract that the defendant said it had breached had not been identified, nor had the defendant’s new contract administrator identified the relevant terms when requested to do so. In those circumstances, the claimant issued Part 8 proceedings seeking a declaration that: ‘Any natural fading of the American Black Walnut veneer supplied and installed by the claimant does not constitute or give rise to a breach of contract by the claimant.’ A more limited declaration than that sought was granted on the following terms: ‘For the claimant to be liable for the fading of the American Black Walnut there must be a breach of an express or implied term of the contract on the part of the claimant. The fading of the ABW cannot, in the absence of an identifiable breach, give rise to a liability on the part of the claimant.’  

The court noted that the dispute gave rise to interesting questions about the interrelationship between construction adjudication, CPR Part 7 and CPR Part 8 – matters which will probably ‘become commonplace over the next year or so, as parties to construction contracts seek a quick resolution of their disputes in an uncertain economic climate.’

To read the judgment, click here.