Don't get cute

Since 1998, when the act came into force, ABB companies have been involved in cases before the courts at a rate of one a year. This litigation rate continues with the recent decision of the Technology and Construction Court in Total M&E Services vs ABB Building Technologies (formerly ABB Steward).

The dispute was about a written labour-only contract between Total and ABB that was varied and added to orally. Total started adjudication proceedings to recover money that it said was owed by ABB. As no withholding notice had been given, the adjudicator duly decided in favour of Total. ABB refused to comply with the adjudicator's decision and Total applied for summary judgment from the court. That application was defended by ABB on five grounds.

First: The adjudicator did not have jurisdiction to decide in favour of Total because the adjudication notice was made out in the name of "Total Mechanical and Electrical Services Limited", which was a different and unrelated company.

The court found that the incorrect name did not apply to the adjudicator's jurisdiction, but was rather a question of misdescription or mistake. Therefore, as everyone knew who was involved, there was no question that any party had been prejudiced by this technical error.

Second: The written contract did not allow for variations. The variations were given orally and were therefore, separate, collateral contracts and were not subject to the act as they were not in writing. The court's judgment on this point ran to three pages, but resolutely dismissed the argument. It held that the contract was partly in writing and partly oral, but section 107 of the Construction Act meant that it applied to the contract as a whole.

The very recent Court of Appeal decision in RJT Consulting Engineers vs DM Engineering (see Tony Bingham, above) might, however, now cause this point to be decided differently in future.

Third: Total put its final account in so late that ABB was not able to recover the additional costs from its employer and therefore was entitled to set-off any increase in the value of the final account. The court dismissed this argument, finding that there was no need to imply a term that a final account would be submitted within a reasonable time. In any event, ABB suffered "no more than a shadowy loss of chance at its highest".

Fourth: Total was not entitled to recover the costs of the adjudication as damages for breach of contract. This ingenious attempt by Total to get around the adjudicator's lack of jurisdiction to award costs found no favour with the court. Put simply, the court found that the act does not provide for costs to be awarded and, in the absence of specific agreement, those costs cannot be recovered. This would no doubt include any attempt to recover adjudication costs through the final account process as occurs in certain circumstances with other professional fees.

Fifth: In any event enforcement should be stayed as Total would be unable to repay the money if finally ordered to do so. Reference was made to Rainford House vs Cadogan in which a stay was granted as the winning party was in administrative receivership.

In this case, however, the court took a much stronger stance, refusing to grant a stay, as to do so would leave Total "in exactly the same position it would have been in had the [Construction Act] never been enacted".

Given that Total had no meaningful assets, had not filed accounts properly and appeared to be in financial difficulty (albeit caused by the withholding of money by ABB) it is difficult, based upon this judgement, to see when a stay would be appropriate.

The breadth of the arguments raised makes this an important case. Perhaps more than most other judgments arising from adjudication it demonstrates that the court will not be impressed by fine legal argument and distinctions where the purpose and spirit of the Construction Act is clear.