Parliament has said that a party can bring an adjudication any time between the start of the contract and the end of the world. Can it possibly have been serious?
MJ Building Services Group is run by folk with experience of installing closed-circuit television. They could make a film out of their own dispute.
The firm took on a lot of work in Kent for rail services company Connex, which wanted to put security cameras in stations and car parks. It was a rolling programme begun in September 2000. Two years and several changes in ownership of Connex later, MJ claimed that it was owed £200,000 and that Connex had failed to fulfil its obligations so fundamentally that the contract had come to an end. Come February 2004, an adjudicator was appointed.
Connex raised a series of objections to the right to adjudicate; these are known as “threshold jurisdiction” issues. Sensibly, the adjudicator agreed to stay the adjudication while the parties went to court to have the threshold points sorted out. Actually, it would have been sensible if those points had been knocked off within a few weeks, because, blow me, they took just over a year to resolve: five months to reach the first court and another eight to get to the Court of Appeal. Not many brownie points there.
There are several interesting points in the judgment of 1 March, but let me pick on one of general importance. It is all to do with the words in the Construction Act that say a building contract (which includes one for CCTV installation) shall “enable a party to give notice at any time of its intention to refer a dispute to adjudication”. What is really meant by “any time”? Can I begin adjudication against you in 100 years time, on my 145th birthday?
Connex said that the alleged act of bringing the contract to an end – or repudiation – took place more than a year before MJ began its attempt to adjudicate. According to Connex’s barrister, this was an “abuse of process”. It was impossible to bring an adjudication after the expiry of a contractual limitation clause, hence the “abuse”. And that being so, the words “at any time” in the act could not be taken literally.
The court now did something that requires care. It looked at Hansard. This is where you will find a verbatim report of debates in parliament. It records who said what when a bill was nudging its way through the legislative chamber. It’s tempting to look here for what the debaters were saying about phrases such as “at any time”. But it’s dangerous because an act or contract should speak for itself: it means what the words say, not what a debater intended them to.
Parliament said ‘any time’. What is really meant by ‘any time’? Can I begin adjudication against you in 100 years time, on my 145th birthday?
In the debate in 1996, Lord Lucas required “at any time” to be in the act so as to stop some tyke inserting a term in a contract requiring that the notice of adjudication be served only at certain narrow times. “We cannot allow that,” he said.
He went on to say that he knew other people doubted the wisdom of allowing parties to refer a dispute to adjudication long after work had ceased. “But so long as disputes are likely to arise, we will live with the fact that an adjudicator’s decision can be sought,” he said.
Cleverly, counsel for Connex argued that since adjudication was seen as quick, cheap and temporary, it could be used “at any time” only if it was indeed quick, cheap and temporary. It was an exaggeration of mine to say it could wait for my 145th birthday, but you get his point.
Tosh, replied the Court of Appeal, ever so politely. The phrase “at any time” meant exactly that: there is nothing to stop a party from referring a dispute to adjudication at any time, even after the expiry of the relevant limitation period. In other words, it is just as open to adjudicate at any time as it is to litigate at any time – even after the expiry of a limitation period. The risk is that the claim will fail because the bloke in the other camp will run the “limitations clause” defence. An adjudicator carrying out an adjudication on a contract completed 145 years before is likely to buy the argument that the claim fails.
The Court of Appeal judge couldn’t resist a poke in the ribs of adjudication: “I can accept that parliament intended adjudication to be quick and (relatively) cheap, although it may not have been entirely successful in bringing this about,” he said. Well actually old chap, we can make it very cheap indeed with your help. But I can’t talk now – I have my 145th birthday party to go to.
Tony Bingham is a barrister and arbitrator