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RJC Consultants Newsletter No.10 Autumn 2007 |
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Newsletter No 10 - Autumn 2007 RJC continues to be involved in a plethora of disputes Adjudications (often multiple on the same project) continue to occur unabated. Business Development Marketing
Dispute Resolution Update A Salutary Tale of a Dispute Between an Employer and his Architect Next he tried to adjudicate against the Architect. He withdrew from this on the Adjudicators advice. So finally he tried to adjudicate against the Contractor. Will he be successful? Wait and see. We will reveal all in the next newsletter. Whatever the outcome, it is clear that all three parties in this dispute feel properly aggrieved at the cost of defending their respective positions. In real terms, Adjudication may not be the right way to deal with certain disputes and as in the case in point, may incur significant, unnecessary costs. This sort of case would be better resolved in Arbitration/Litigation where tripartite disputes can be properly dealt with and the innocent party can recover its costs. For advice on dispute resolution, contact: raycrabbe@rjc- consultants.co.uk Do I have a Single Dispute or Multiple Disputes? ‘Time’ and ’Quantum’ are matters that are frequently in dispute between parties and frequently referred to adjudication. The test would seem to be that if the time and quantum elements of a dispute were intrinsically linked then they would form one single dispute. For example, if a dispute over extension of time entitlement is referred to adjudication, the levying of liquidated and ascertained damages and the entitlement to reimbursement of prolongation costs are likely to also be in dispute and are intrinsically linked to the extension of time entitlement. However, other elements of a valuation may not be. |
This issue has recently been considered in the Court of Appeal case of David and Teresa Bothma t/a DAB Builders v Mayhaven Healthcare Limited [2007] EWCA Civ 527 which upheld a decision of HHJ Havelock-Allan QC in the Bristol Technology and Construction Court. In this case, the Referring Party attempted to refer to adjudication 4 issues, 3 of which concerned the completion date and extensions of time and 1 of which concerned other matters of valuation. HHJ Havelock-Allan QC decided that 2 disputes had been referred to adjudication, that the adjudicator acted without jurisdiction and that the adjudicator's decision was therefore unenforceable. Therefore, if you find yourself in dispute, and are minded to refer the matter to adjudication, make sure that you are referring only one dispute to each adjudication, to avoid the prospect of having the decision challenged and incurring wasted costs. Withholding Notices: Issue against the right payment notice or miss the boat! This could be, for example, because defects were not discovered during the period in which the goods were delivered and/or installed, or because a party has not ascertained costs incurred and to be set off, or simply because a party has made a conscious decision to “pay the money this month... we’ll get it back later.” The party then, in a later payment cycle, issues a Notice of Payment [S110 Notice] detailing an amount due, followed by a Withholding Notice [S111 Notice] in respect of the earlier abatements or set offs and accordingly reduces the amount paid. This practice often forms the basis of a dispute between the parties, which is then referred to adjudication. The question that the Adjudicator has to ask him/herself is “What is the effect of the failure to serve a Section 111 Notice during the course of the works and can this omission be rectified by the service of a Section 111 Withholding Notice at a later time when later interim, or final account monies become due for payment?” A strict interpretation of the Act is that in the absence of an S111 Notice, full payment must be made and there can be no attempt to recover any overpayment in subsequent payments. In other words the S111 Notice, be it abatement or set off, must be applied to the S110 Notice to which the deductions relate. This strict interpretation has been supported by nearly all English cases, the following being two examples:-
So the message is, if you are going to rely upon a Withholding Notice to deduct from monies otherwise due, be it abatement or set off, the Notice must be issued against the payment to which the deduction relates. Should you require further information on the subject of Withholding Notices and/or to discuss us presenting a workshop on this topic, please contact Roger Smith at our Slough Office. Telephone: 01753 530800 Website: www.rjc-consultants.co.uk E-mail: slough@rjc-consultants.co.uk |
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