As with the coastline of England or the Mandlebrot Set, the closer you look at standard forms of contract, the more complexity you find. Take this example …
In this dispute it was ever so important to know the date when an adjudication was commenced. Was it when the “notice of adjudication” was fired off? Or was it when the “referral” – being the full story – was fired off? Or was it when a new “notice of adjudication” was fired off because the referral after the first notice had arrived late? The word “nitpicking” comes to mind. Blame lawyers. Blame the folk who cobble together fancy forms of contract. Each clause in standard forms contains a lawyer’s fee note.
Mr Tracy Bennett decided to refurbish a house.
He contracted with FMK Construction. The bumf included the JCT98 standard form. Builder and client fell out. Actually that’s not quite accurate. The builder fell out with the ringmaster. The JCT requires an architect to independently and impartially issue certificates … for money, for time, for completion and more. It’s a sort of triangular relationship: employer, architect, builder. Builders are often suspicious about the architect’s ringmastering. Truth to tell, the clients are, too. Anyway, the builder in this spat didn’t welcome the architect’s final certificate. He said it was wrong. No, no, said the client, I like it. Hence the dispute.
The RIBA appointed an experienced adjudicator. Now comes the technical rigmarole. The builder served the notice of adjudication and the adjudicator was nominated. The referral paperwork then turned up. That referral arrived in the afternoon of the seventh day following the notice. Dear, oh dear, said the client’s advisers, that’s too late. The JCT rules say the party who starts an adjudication must have “the objective” of securing the nomination of the adjudicator and the objective of serving the referral within seven days of the notice. And if that is not the objective the contract is breached. Hmmm.
Anyway this argument was put to the adjudicator. He reckoned that there was a risk that the argument had legs. In any case, it is so easy to reserve the notice and make the appointment perfect, why not do it? So he resigned. Then the notice was reissued and the RIBA renominated the same adjudicator.
Builders are often suspicious about the architect’s ringmastering. Truth to tell, the clients are, too
So, let’s get on with the adjudication. Well, not so fast. The client’s lawyers now fired a brilliant salvo. The adjudication having got under way from the date of the second notice of adjudication was now caught, they said, by the time rules in JCT98 regarding the final certificate and all the complex bumf that is triggered by that document. They told the adjudicator that since the final certificate was validly issued more than 28 days before the second notice, he was bound to obey its effect.
In short, the effect is that the final certificate is conclusive evidence that extensions of time and direct loss and expense have been finally settled. The builder didn’t like that one bit; his complaint was that the architect’s certificate was wrong. So, the “harmless” decision of the adjudicator to resign had enormous implications.
So, the adjudicator invited the parties to go to court and ask for a declaration by a judge. Ask: When did the adjudication commence? And when was the adjudicator validly appointed? The client wanted the start date to be the second notice, which was 22 April 2005. The builder wanted the start date to be the first notice, being 6 April. That would allow him to escape the effects of the final certificate. Oh dear. Why do we make these forms so complicated?
The short answer of the court was that in this case the first notice in law began the adjudication, as serving a second notice to correct a possible procedural error was quite different to beginning again. Moreover, the new notice was identical to the old. By the way, if on receipt of a nomination the adjudicator under JCT98 told the referring party to get its referral documents to him after the seven days, that would be all okay. The reason is that under that contract the adjudicator can set their own procedure. A useful case on this is William Very vs Mikvah. Having said all that, it wouldn’t surprise me if the service of a late referral were not fatal. It may all be to do with commercial common sense, but who knows?
Tony Bingham is an arbitrator and barrister