The insistence that a contract be ‘in writing’ before it can be adjudicated is transferring millions of pounds from one industry to another. Guess which ones they are …
I picked up my pen this week … and I was stumped! I couldn’t decide what word to start with. Let’s try “malarkey”. That’s it. This malarkey in adjudication about “contracts in writing”. It’s codswallop, hooey, rot and baloney. One adjudicator put it to me in an email this morning (while wrestling with yet another section 107 “in writing” argument): “If the DTI needs to be sure there is a net benefit to effect a change, then there can be no greater benefit than avoiding all of these costs.” And in a case last week called Redworth Construction vs Brookdale Healthcare, tens and tens of thousands of pounds was thrown down the drain.
Time and again, construction work is carried out by way of an agreement that is not in writing. Now then, the Construction Act says its adjudication provisions only apply where the contract is in writing. The act then gives a page of bumf telling you what that means; it even explains how a contract “other than in writing” becomes a contract in writing. In short, it tries every which way to bring all sorts of contracts into the act. But, day in, day out, adjudicators are faced with a tease: the respondent points out that the claimant hasn’t proved that the contract in dispute is in writing. Frequently, the adjudicator agrees and clears off and sends his bill. Frequently, the adjudicator disagrees, carries out the adjudication and, as in Redworth vs Brookdale, it’s all void.
Redworth has just completed a £4.5m day centre at Wyboston, Bedfordshire for Brookdale Healthcare. Nice job; I’ve seen it.
A dispute arose and Redworth came to adjudication. Brookdale explained to the adjudicator that there was every intention of using JCT standard form but the negotiations on the scope of the works and price had dragged on and on. True, it wasn’t signed, but the adjudicator was convinced by Redworth and pressed on. In due course he awarded £210,000 to the builder. Now Brookdale had to pay up or go to court.
On top of the £50,000, Redworth and Brookdale engaged Queen’s Counsel to argue for four days …
All you good folk at the DTI should sit up straight, hands on head, and pay attention. How much money by now has been spent on this adjudication? My guess is that the costs are by now £50,000. Brookdale decided to roll its dice in court. When the builder sued for enforcement, Brookdale argued that there was no contract in writing and the whole exercise was void. Judge Richard Harvey QC agreed.
How good are you folk at the DTI at sums? On top of my guess of £50,000, both Redworth and Brookdale engaged solicitors and Queen’s Counsel to argue for four days. My guess is that another £40,000 goes in the plus column. So, about £90,000 has been wasted. The adjudication is void. And if my £90,000 guess is too high, make the wasted costs £60,000 or £50,000; who cares?
Well, actually, quite a lot of us care. Adjudicators are perfectly able to decide disputes, which include arguments about the existence or non-existence of unwritten terms. We do it all the time about implied terms; we do it all the time about oral express terms when the parties have agreed to adjudicate. Oral terms, oral promises and the quarrels about their existence is ever so ordinary in dispute work. So, come on DTI, get to grips, please.
One other point, I said earlier that instead of pressing on, adjudicators often refuse to continue. But there is waste here, too. The adjudicator, while receiving submissions about the “in writing” malarkey, must press on with the adjudication. Then, bang, they stop and send their fee notes. Do not be surprised if by then the adjudicator has clocked up 30 hours of work. Sums still okay? Hands off heads. Please now do something.
Tony Bingham is a barrister and arbitrator