Keeping the cat in the bag

The Institute of Civil Engineers (ICE) seems, and always has seemed, to want to push people into “disputomania”. Its adjudication procedure includes a leftover from the days of dinosaurs.

It is the same pushy notion that used to apply to what used to be in the ICE documents called “The Engineers Decision”. All and every dispute was supposed to be decided by the project engineer. Hardly could the engineer be called unbiased. Come to think of it, that scoundrel engineer Brunel liked to decide all the disputes himself. I bet he never lost once!

Hardly could the engineer be called unbiased. Come to think of it, That scoundrel engineer Brunel liked to decide all the disputes himself. I bet he never lost once!

Unless the disgruntled contractor shouted “let’s arbitrate” within three months, the engineers’ partisan and biased decision became final and binding. And, yes, that did happen, mostly because the contractor was busy constructing instead of reading the small print. The recent humdinger of a row between Buckingham Group Contracting Limited and Westshield Civil Engineering Limited (or Westshield Limited), had all these same deadline time games.

The adjudication procedure pushed out by the ICE has a clause, which says: “Should either party be dissatisfied with the decision of the adjudicator that party may within 28 days of the adjudicator’s decision refer the dispute to either legal proceedings or arbitration in accordance with clause 15 of this subcontract. If no such proceedings are commenced within the said 28 days then the adjudicator’s decision shall be final and binding on the parties.”

Buckingham Group Contracting was the main contractor for a studio for the TV soap Coronation Street. Westshield became their subcontractor for supply and laying of drains.

There were two quarrels:

• Was it Westshield Limited or was it Westshield Civil Engineering Limited that contracted with Buckingham? (Oh, dear - this sort of mess is not uncommon)
• The subcontractor valued the final account at £550k, but Buckingham said £364k.

Buckingham started the adjudication and had second thoughts as to the final account- it became £295K in the referral and wanted a repayment. The subcontractor also had second thoughts and came in at £641k in its response to the referral. It argued that Westshield Limited rather than Westshield Civil Engineering Limited was the subcontractor. If that was true it was unfortunate for Buckingham, because Westshield Limited had just been placed into a creditors voluntary liquidation.

Mr Philip Doherty was appointed adjudicator. He decided the correct company on drainage was Westshield Civil Engineering Limited and decided the final account was £505k.

Buckingham ‘s lawyers popped into the high court in Manchester and took out a claim form against the two westfield companies, then kept the form up its sleeve for four months

Now comes the fun. Do you recall that clause giving 28 days to refer an adjudicator’s decision to either litigation or arbitration? Well, Buckingham made a canny move. Its lawyers popped into the High Court in Manchester and took out a claim form against the two Westshield companies, then kept the form up its sleeve for four months. By now the 28 days in the clause looked to be well past. Buckingham told Westshield it could sling its hook for the cash.

Unsurprisingly, Westshield sought to enforce the adjudicator’s decision. Buckingham said it was unenforceable but if it was enforceable they told the court that it had commenced court proceedings on the true value of the final account. Westshield argued that Buckingham was out of the 28-day time frame and was therefore permanently stuck with the decision of the adjudicator.

The High Court had to decide what is meant by “proceedings are (to be) commenced within 28-days of the adjudicator’s decision”. Buckingham said it had done so but kept mum! Foul, shouted Westshield. The builder and subcontractor have themselves become stars in a soap - a sort of courthouse in Coronation Street. When Buckingham popped into court and completed a claim form, paid its fee and didn’t tell Westshield, had proceedings “commenced”? That’s all it takes. Then the claimant has four months to hold on before letting the High Court’s cat out of the bag.

Buckingham may well have no appetite to go on into expensive litigation and may prefer to wait and negotiate a settlement.

Come on ICE - drop this clause, it pushes people into disputomania.

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