In the right spirit

There is a first class reminder by the judge in this High Court case about the spirit of construction contract adjudication as a whole. It’s not a game for arguing clever-dick points, which are “technically fascinating” but entirely lacking in merit and completely hostile to the spirit of adjudication.

The judge put it in more judge-like language in this case, Rob Purton (t/a Richwood Interiors) vs Kilker Projects Limited. The fact is that this remarkable device called adjudication has become entangled in the grinding detail of the traditional approach to the resolution of construction disputes - precisely the sort of thicket that litigators devote hours to so as to pretend it is all complicated.

The spirit of adjudication was, and still is, supposed to be a piece of machinery equally accessible to those who are legally represented and to those who are not. Come to think of it, back in 1998 it was a loony idea to suppose anyone but real-life construction folk would “do” adjudications. It was the two construction outfits that would poll-up and argue the dispute in front of a construction wallah. Cheap, cheerful rough justice intended to decide pro tem whether the man with the moneybags would shell out or let him keep his hand on the pocket. Note the “pro tem”.

Kilker Projects Limited is very much involved with refurbishing five-star hotels. The Dorchester Grill makeover is one of its prestige jobs. They entered into the joinery subcontract, perhaps, (possibly?) with Richwood Interiors. Or was it Rob Purton, the owner of Richwood? Do you have a feeling we are involved with some “technically fascinating” points? I will try to spare you.

The firms fell out. They came to adjudication. The first attempt fell over (technical points) and the adjudicator cleared off. The second attempt did a bit better; the adjudicator this time gave the elbow to more technical points. Purton (or Richwood Interiors, or both) was awarded £150,000. But Kilker refused to obey the award.

So it came to pass that the parties invested their time and money coming to the High Court. Kilker argued that there was no concluded contract between the parties and therefore the adjudicator had no jurisdiction. Alternatively, Kilker argued that if there was a concluded contract, it was not the contract referred to adjudication. Note too that whatever the relationship between the parties happens to be, it arose out of an oral agreement. You may recall that revisions to the Construction Act in 2011 allowed in, at last, and quite properly, oral contracts. Gone were the days and wasted pounds on requiring a contract in writing.

Anyway, there was a range of arguments in court giving the story about how, or if, the deal was done and what principles are applied to fathom the how, what, where and when the bargain arose. The impression gained from the commentary of the judge is that the edges to the deal are a tad blurred.

“To my mind,” said the judge, “it seems clear beyond argument that there was a contract.” The clue, if it was needed, was that by now Kilker had paid Purton £654,000. But what was the contract and what are the terms? And now the judge put the whole idea of construction adjudication back in the box. He looked at it like this: the jurisdiction to refer a dispute to adjudication is dependent upon the existence of a “construction contract” and secondly a dispute. Given this was the supply and fix joinery work and given the row was about money due, the basic requirements to call up an adjudicator were satisfied. The adjudication process, said the judge, “is not dependent upon having to identify each and every term in the contract with complete accuracy”.

Adjudication is not a formalistic obstacle course where one slip in the procedure would put a party literally out of court. And it is worth repeating what the judge said: “The intention that the adjudication system should provide quick and effective remedies for contracting parties, easily accessible to those who are legally represented and to those who are not, an approach which deprived adjudicators of jurisdiction where a dispute has been referred that has arisen under a construction contract because of an error in its characterisation, would as a matter of legal policy be unacceptable.” Hurrah for that approach.

Suppose the referring party said the contract was made from ABC Contract. But the respondent argued it was XYZ Contract, not ABC, and invited the adjudicator to abandon the appointment. He refuses to go and gets on with the award. It is then argued to be the wrong contract in enforcement proceedings in the High Court. The judge agrees but decides the outcome makes no difference to the award. It will be enforced.

This is the pragmatic context of adjudication and is the truly intended purpose of the system. That’s what was intended to be the spirit of adjudication. It is not a place to run those technically fascinating legal points. It’s a rough and ready forum to decide who will have the benefit of the dispute money: “Pay now argue later.”

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple