Cases - Yuanda (UK) Co Ltd v WW Gear Construction Ltd
Record details
- Name
- Yuanda (UK) Co Ltd v WW Gear Construction Ltd
- Date
- [2010]
- Citation
- EWHC 720 (TCC)
- Legislation
- Keywords
- Contract amendment - void terms - tolent clauses
- Summary
-
WW Gear Construction (WWGC) were constructing a hotel and entered into a number of trade contracts, including one with Yuanda for glazed curtain walling, based on the JCT trade contract. Importantly, the JCT adjudication clause had been deleted and replaced with a clause which stated that, notwithstanding the outcome of any dispute, Yuanda would be liable for both its own costs and WWGC’s costs if Yuanda started an adjudication.
The key issue in this case was whether the clause was a so-called 'Tolent clause' and thereby offended section 108 of the Construction Act (entitling a party to a construction contract to refer a dispute to adjudication at any time).
It was held that both the Construction Act and the Scheme for Construction Contracts are silent on the question of costs, and an adjudicator has no power to award costs unless the power is conferred on him by the parties. If, as here, the effect of the contract provision conferring such power was to clearly discourage a party from exercising its right to refer a dispute to adjudication then this was contrary to both s.108 of the Construction Act and the Scheme, with the result that the Scheme adjudication provisions applied in place of all of the contract adjudication provisions (not just the offending costs clause).
This case is of interest as it highlights the importance of ensuring compliance with the statutory framework when amending contracts, and confirms that the statutory right to adjudicate cannot be contracted out of.
Any non-compliance between a contractual adjudication scheme and the requirements of The Housing Grants, Construction and Regeneration Act 1996 results in the scheme provisions being introduced in their entirety.
A clause that provides that the referring party shall be liable for both parties’ costs and the costs of the adjudicator was found to be inoperable because it inhibited a party from pursuing its contractual remedies. Further such a clause was in breach of the requirements of the Housing Grants, Construction and Regeneration Act 1996 which therefore made the contractual adjudication scheme non-compliant.