Beware of bunny boilers

Tricky thing, sacking your building contractor halfway through the job. So it is worth picking up a few hints about how to do it from a case called Robin Ellis vs Vinexsa International. It was in arbitration rather than adjudication, but no matter. You adjudicators would do well to read the story.

The job was a modest affair involving the refurbishment of two flats in swanky Mayfair.

Customer and builder found themselves in a "difficult and strained relationship". Then they fell out good and proper when the customer's architect fumbled his way around the contractual bumf to be used for "determination by the employer".

The standard form was the JCT intermediate. The architect went to the small print because the builder had marched his men off site. The architect sent a "default notice". That missile proclaimed that the builder, without reasonable cause, was failing to proceed regularly and diligently, and had 14 days to get his lads back on site or else the employer might determine the contract. And further, said the formal notice, if the naughty builder repeated the said behaviour, then the employer would boot him off the job. Truth is, the JCT document puts it all a little more legalistically, but you get the drift.

The upshot of the architect's missile was that the builder came back to site and got on with the work – but not for long. Two weeks later he was gone again. So the architect sent another default notice. Oops! That letter was a mistake. Can you see why? The JCT contractual machinery doesn't provide for the architect to give another warning notice. The architect isn't supposed to do anything at all if the builder misbehaves (allegedly) again. He ought to have kept quiet and left the crucial next move to the employer. The employer can accept the behaviour of the builder or put an end to the builder's involvement forever.

The builder said the employer was in deep trouble for dismissing him – he was going to milk the mess for all it was worth

Two days after, the architect's withdrew the second default notice. Presumably, he had spotted the mistake. Then the employer sent a "determination" letter. But now the builder said the mechanism for determining his employment had not been followed and the employer was in deep trouble for wrongly dismissing him. In other words, the builder was going to milk the mess-up for all he was worth.

The dispute came to arbitrator–barrister, Peter Aeberli. He had to decide whether the builder's dismissal from site was carried out effectively. Can you see how important this is? If it was properly done for good reasons, then the employer was in a good position to claim the consequences of getting a replacement builder. If not properly done, even for good reasons, the builder was in a good position to claim the consequences of getting the boot.

So, said the builder, look at what the leading law books say. Hudson states: "Exact compliance with procedural requirements will usually be required if a contractual determination is to be successful." Keating 7th Edition says: "The courts construe forfeiture clauses strictly, and wrongful forfeiture by the employer … usually amounts to a repudiation on the part of the employer." Oh, dear.

Mr Aeberli decided that the architect's second notice was effectively withdrawn, so the employer's final notice was technically good. The builder decided to take the arbitrator's decision on appeal to the High Court. His Honour Judge Thornton said that since there was no power for the architect to issue a second notice of determination, his notice had no effect and there was nothing to withdraw. Neat. In which case the employer's final dismissal was procedurally effective. His appeal was dismissed. So, for different reasons, the arbitrator and the judge reached the same result.