Cases - William Verry Ltd v North West London Communal Mikvah

Record details

Name
William Verry Ltd v North West London Communal Mikvah
Date
[2004]
Citation
BLR 308
Legislation
Keywords
Adjudication - construction contract - enforcement of adjudicator's decision - service of referral notice - time of service of referral notice - dispute at time of adjudication notice - time periods - delay - out of time - referral notice served out of time - errors of law - adjudicator making error - stay - stay of execution
Summary

William Verry were contractors for the construction of a Jewish ritual bath. A number of disputes arose during the course of the works, which William Verry referred to adjudication on several occasions.

In the last adjudication, NWLCM failed to pay in accordance with the adjudicator's decision and William Verry applied for summary judgment. NWLCM resisted the application on 3 grounds:

  1. They argued that the referral notice was served 1 day too late.
  2. They argued that there was no dispute in existence when William Verry served its notice of adjudication.
  3. They argued that the adjudicator had failed to consider an issue that had been referred to him.

With regard to point (1), the judge concluded that the Act requires that the contractual timescale should have the object of securing the referral of the dispute to the adjudicator within 7 days of the adjudication notice.

Thus, the statute is setting a minimum requirement for the contract. The contract must allow a referring party, if it chooses, to issue a referral notice within the prescribed 7-day timescale. However, there is nothing in the Act to preclude the contract from being drafted so as to provide additional machinery that enables the adjudicator to extend that timescale and enable the referring party to refer the dispute outside the 7-day period if it chooses to.

In other words, the Act requires contractual machinery that enables the referring party to refer the dispute within 7 days of the adjudication notice, but it does not prohibit a machinery that additionally enables the referring party to refer the dispute outside that timescale if it elects to take longer in making the reference.

Therefore, in the light of William Verry's compliance with the adjudicator's procedural direction as to the service of the referral notice, that notice was served within time and the subsequent adjudication and the resultant decision of the adjudicator was not invalidated by the referral notice being served out of time.

With regard to point (2), the judge concluded that the nil valuation that had been referred to adjudication was the culmination of a lengthy and contentious process that had started when William Verry had contended that the works were both satisfactorily complete and that practical completion had been achieved, whereas NWLCM's agent had asserted that the works contained significant defects that precluded them from being regarded as complete or as having achieved practical completion. The judge therefore concluded that the adjudication notice referred an existing dispute that had already crystallised to adjudication. The notice was not premature and the adjudicator was validly appointed.

With regard to point (3), the judge concluded that the adjudicator had made several errors, most notably in failing to take into account arguments of abatement raised by NWLCM. The question was whether the errors of law were errors made within jurisdiction or were so fundamental that their effect was to transform the adjudicator's consideration of the referred question or dispute into a consideration and determination of a different question or dispute to the referred question. On balance, the judge concluded that the errors of the adjudicator were made as part of his answering the right question wrongly, rather than in answering the wrong question.

Having concluded that the adjudicator failed to take into account arguments of abatement that had been properly referred to him, the judge was reluctant to enforce the adjudicator's decision, which would require payment.

However, that was the logical effect of the judge's earlier finding that the adjudicator had answered the right question wrongly and his decision was therefore made within jurisdiction.

The judge therefore decided that the adjudicator's decision should be enforced, but that the judgment should not to be drawn up for 6 weeks from the date of handing down so as to give NWLCM sufficient time to commence another adjudication on the abatement point. If that subsequent adjudication decision is in favour of NWLCM, effect can then be given to those developments so that one decision can be set against the other and only that balancing figure paid to the net winner.