Tally subsequently wrote saying it would like to use the JCT Prime Cost form. Pegram wrote back. It did not like the JCT contract and suggested its own standard conditions. Several letters were exchanged without any conclusion being reached.
Work went ahead, but a row broke out about the final account, and in July 2002 Pegram started an adjudication. It maintained that its conditions had applied, and as they did not contain any adjudication clause, the Scheme for Construction Contracts provided the procedure for the adjudication. Tally maintained that the JCT contract applied, and with it the JCT adjudication rules.
The adjudicator decided to press on using the Scheme, and made a decision in favour of Pegram in the sum of £95,484 plus interest.
Tally refused to pay. It argued that there had been no contract, and that therefore the adjudicator had no jurisdiction. It also argued that if there had been a contract, it would be based on the JCT form, therefore the adjudicator had been appointed on the wrong basis and so again he had no jurisdiction.
This came before Judge Thornton in the Technology and Construction Court in February. He was not impressed by the apparently artificial arguments put forward by Tally. It was difficult for them to say that there was no contract but at the same time to say that the JCT contract applied. He took the view that there may be doubt about the exact terms of the contract, but not about its existence. If there was doubt about the choice of adjudication rules, the Scheme should apply by default. He gave summary judgment in favour of Pegram.
The decision may have seemed like common sense, but Lord Justice May had little problem in turning it upside down
This seemed to be a robust, common-sense way to stop an unsuccessful party from escaping. After all, the differences in the two sets of adjudication rules are unlikely to have made any serious difference to the sum of money that had to be paid.
Tally did not agree; it went to the Court of Appeal. Judge Thornton's decision may have seemed like common sense, but Lord Justice May had little problem in turning it upside down.
Tally may have been right in arguing that the JCT contract was in place, and not Pegram's own terms. It may also have been right in arguing that if the JCT contract was not agreed, there was no contract at all. Certainly there was no contract in writing, which is the starting point for any adjudication. Therefore it was possible that the adjudicator had had no jurisdiction. If there was an arguable defence to enforcement of the adjudicator's decision, which there was, Judge Thornton should not have given summary judgment.
Lawyers who support the efforts of the courts to stop artificial arguments about the enforceability of adjudicators' decisions will reluctantly accept that this decision is right.
John Redmond is head of construction at solicitor Osborne Clarke in Bristol.