[2010] EWHC 1529 (TCC)

The parties entered into a contract under the NEC2 form. LOR alleged that AWS had failed to serve a valid notice of dissatisfaction under clause 93.1 within four weeks of a decision of an adjudicator. The failure did not consist of a failure to send the document to LOR within the four week period, but a failure to send it to what LOR said was the correct address for service.

AWS argued that a contract which requires a mandatory adjudication prior to the chosen means of final determination is non-compliant with the HGCRA. The HGCRA is silent on this issue. However, Mr Justice Edwards-Stuart noted that a contract that obliges a party to refer a dispute to adjudication before he can pursue it by either litigation or arbitration did not impose any fetter on the right to refer a dispute to adjudication at any time. However, it did prevent a party from starting proceedings in the courts or by way of arbitration at any time, because he cannot do so without having first referred the dispute to adjudication.

In terms of the service point, clause 13.2 of the NEC core conditions states that a communication has effect when it is received at the “last address notified by the recipient for receiving communications or, if none is notified, at the address ...stated in the Contract Data”. The Judge noted that the probable commercial purpose of the clause was to enable the parties to work on the basis that all communications in relation to the contract will be channeled through one particular office. This had the obvious advantage of enabling every incoming document to be properly filed and its arrival properly recorded. It was then up to a designated member of staff to ensure that incoming documents are then copied to all those individuals who have an interest in seeing them.

Here, the notice of dissatisfaction had found its way to the relevant individuals in LOR within the prescribed time. However, that was not the answer to the problem here. The Judge concluded that compliance with the mode of delivery specified in clause 13.2 is the only means of achieving or securing effective delivery because that communication only takes effect when it is received at the prescribed address. Therefore, Mr Justice Edwards-Stuart rejected the submission that the fact that notification was received within time by the relevant personnel at LOR would trump the failure to give notice in accordance with the contract. That said, on the facts here, an agreement between the parties during the adjudication to serve documents on a particular address meant that that office became the notified or prescribed address.

In addition, the Judge also found that the conduct of those acting for LOR was a material contributing cause to the fact that the notice was not sent to correct contract address before the deadline expired. Further, given that the notice was in fact received in time by the people at LOR who needed to see it, the Judge considered that it would be unjust to hold AWS to the strict provisions in relation to service. Therefore the Judge was prepared to exercise the discretion afforded by s12 of the 1996 Arbitration Act and grant an extension of time for service of the notice.

Finally the Judge made an interesting comment on the NEC Form which is bound to be much repeated:

“! have to confess that the task of construing the provisions in this form of contract is not made any easier by the widespread use of the present tense in its operative provisions. No doubt this approach to drafting has its adherents ... but, speaking for myself and from the point of view of a lawyer, it seems to me to represent a triumph of form over substance.”