Knockout argument

The Judge in Gibson vs Imperial Homes gives a useful nudge to disputing parties that adjudication is not always the right forum to choose. It might sometimes be better to litigate. He reminded me of that lovely opening line in a judgment of Lord Denning, 20 years ago: "When I was young, a sandwich-board man wearing a top hat used to parade outside these courts with his boards back and front, proclaiming: 'Arbitrate, don't litigate'. It was very good advice so long as arbitration was conducted speedily, as many still are in the City of London. But it is not so good advice when arbitration drags on forever."

Judge Toulmin QC in the Gibson case said of adjudication: "If instead of starting the adjudication process, an ordinary action had been started in this court in March 2001, even allowing time for a mediation, which might well have been successful, the trial on the merits would already have taken place and the parties would now have a final decision. If there were no real difference on the merits, the final judgment would have been obtained some months ago. Instead, I am considering a provisional decision by the adjudicator, which the losing party will have an opportunity to overturn at a later stage on the merits. Clearly the claimants are entitled to take the matter to adjudication, but I am not sure it is appropriate to do so when forms of final dispute resolution are immediately available."

I will tell you what happened in Gibson in a moment. But have a think about not adjudicating at all. Remember, adjudication is only an option. True, it becomes compulsory as soon as one party calls for it; the other party then has to come out and play adjudications. But if the complaining party pauses to think for a moment, it might be better off to come instead to the Technology and Construction Court and begin an ordinary action.

The key point is to come with a case that will achieve summary judgment. Here the claimant shows, on paper, at a short hearing before the judge, that the defendant has no real prospects of succeeding on its defence. True, you will not deliver a knockout blow like this if there are disputed questions of fact requiring oral evidence; that would require a full trial. But many other issues can easily come for swift and summary judgment. It may even be cheaper to use the court for this than go to adjudication.

The downside of coming to court is what I call the comfort zone. Constructors are comfortable with other constructors deciding their quarrels. The constructors "take part" in adjudication but not so in court, where they are mere spectators while the legal gladiators do their stuff.

The key point when going to the Technology and Construction Court is to come with a case that will achieve summary judgment

As for Gibson, he was engaged for building work in Bow, London. The contract was negotiated and put in place by CN Associates, acting as management contractor and agent for the employer. It had written to Gibson on 7 October: "Further to our recent meeting we hereby confirm on behalf of our client Imperial Developments Ltd, that you are to proceed with the works at the above premises as discussed."

In due course, a dispute arose about money due. The adjudicator was the experienced Mr Peter Talbot. He was faced with a barrage of "no jurisdiction" arguments. The employer said that its agent had no authority to place a contract on Imperial Developments – in any case, there was no such firm. Then it was said that Gibson in person was not the contractor; this was Gibson Construction UK Ltd. Therefore the letter of 7 October did not record the contract in writing as required under the Construction Act. The adjudicator wouldn't accept any of that and awarded £100,000 to Gibson. The employer wouldn't pay, hence the enforcement proceedings in court. The judge decided that there was indeed jurisdiction and ordered the money to be paid.

In short, Mr Gibson could act as agent for his company or himself in person. Further, the management contractor was agent for the employer, and bound the employer whoever or whichever company that was. Therefore the letter of 7 October did constitute a contract in writing and satisfied the Construction Act.