April 29, 2014

Importance of accuracy in adjudications

Construction & Engineering

Background to the case
The University of Brighton (the Employer) engaged Dovehouse Interiors Ltd (the Contractor) to carry out £2.5m of fit out works to one of its buildings.

The contract was a JCT Intermediate Building Contract with Contractor’s Design (2005 Edition, Revision 2 (2009). The relevant clauses in the contract stated that:

  1. Notices had to be given to the Employer’s Mithras House address in Brighton
  2. The nominating body who would appoint any adjudicator was to be the Chartered Institute of Arbitrators (CIArb)
  3. The Final Certificate under the contract “shall be conclusive evidence of the matters stated in it” but
  4. The Final Certificate would not be conclusive evidence if “adjudication, arbitration or other proceedings are commenced… not later than 28 days after the final certificate has been issued.”

The Final Certificate was issued for the sum of £2.09m. Dovehouse Interiors disagreed with it and claimed £3.6m should have been certified.

The day before the Final Certificate was to become binding and conclusive, Dovehouse Interiors served a notice of adjudication.

There were two problems with the commencement of the adjudication:

  1. The notice was served at the wrong address of the University of Brighton (i.e. not the Mithras House address), and
  2. An adjudicator was appointed by RICS (not by the CIArb as he should have been). This adjudicator realised the error in his appointment and resigned.

Three days later, a second notice of adjudication was served, this time:

  • correcting the earlier Adjudication Nominating Body error, and
  • served at the correct address of the University of Brighton.

However, by the time the second notice was served, it was outside the time period when the Final Certificate could be challenged. So on the face of it, the Final Certificate certifying Dovehouse Interiors was entitled to £2.09m was final and they had lost their chance to claim the sum of £3.6m.

The University of Brighton applied to the Technology and Construction Court for a declaration that Dovehouse Interiors was out of time to bring its claim and that the second adjudication should be abandoned.

The judge (Mrs Justice Carr) dismissed the University of Brighton’s arguments and found that:

  1. The first notice was valid even though it was sent to the wrong address, and
  2. Appointing an adjudicator using the wrong Adjudicator Nominating Body also did not invalidate the notice.

The court found that Dovehouse Interiors was entitled to continue with its adjudication and the Final Certificate was not conclusive. The court went back to basic principles and determined that the purpose of the notice of adjudication was to notify the other party of the dispute and the scope of the dispute. This it did and therefore the adjudication was started within time.

A surprising result

This is an unusual result - before a different judge on a different day, the result may have been very different.

What the decision does illustrate is the critical importance of ensuring that the notice is 100% accurate from the start.

If you have any queries about Final Certificates, JCT contracts, adjudications or need advice on any other construction issue, contact Julian Kirkpatrick in our Construction & Engineering team on 0800 923 2063 or email [email protected]

Share on: