Building Law Monthly

In WW Gear Construction Ltd v McGee Group Ltd [2012] EWHC 1509 (TCC), [2012] All ER (D) 16 (Jun) Mr Justice Edwards-Stuart held that, although the court did have jurisdiction to grant a declaration in the context of an ongoing adjudication, it should exercise that jurisdiction very sparingly and only intervene in a rare case. The present case was held not to be such a rare case. The factor which weighed most heavily with Edwards-Stuart J was that intervention by the court risked causing injustice in the context of the adjudication, both because it might distract the respondent from giving full attention to the adjudication and it could seriously interfere with the adjudicator’s ability to conduct the referral properly. In the latter context, an important factor was that the adjudicator would have had just over one working day in which to consider the judgment of Edwards-Stuart J. This was held to be an unacceptable imposition on the adjudicator and one that could result in unfairness, misunderstandings or mistakes and so it was held not to be appropriate to grant the declaration sought.

In Compass Group UK and Ireland Ltd v Mid Essex Hospital Services NHS Trust [2012] EWHC 781 (QB), [2012] All ER (D) 230 (Mar) Mr Justice Cranston held that the scope of a duty to cooperate in good faith depends upon the circumstances of the case and the nature of the particular contract. Good faith required more than the absence of bad faith and provided an objective standard of conduct which demanded that both parties be faithful to the common purpose of the contract and required fair dealing and consistency of behaviour.

In PHI Group Ltd v Robert West Consulting Ltd [2012] EWCA Civ 588 the Court of Appeal held that the claimant had failed to make a Part 36 offer as a result of its failure to specify a period of not less than 21 days within which the defendant would be liable for the claimant’s costs if the offer was accepted. Although the letter was clearly intended as a Part 36 offer, its failure to make any reference to a time period meant that it was not compliant with Part 36 and it was not open to the court to treat it as if were compliant. However, the Court of Appeal was able to achieve a result similar to that which it would have reached under Part 36 by the exercise of its general discretion as to costs under Part 44 of the CPR.

In Specialist Insulation Ltd v Pro-Duct (Fife) Ltd [2012] CSOH 79 Lord Malcolm applied the rules of offer and acceptance to a case in which the standard terms of one party contained an adjudication clause, but the standard terms of the other party contained an arbitration clause. He held that the contract had been concluded on the latter terms so that there was no adjudication clause in the contract between the parties. This being the case, it followed that the adjudicator had no jurisdiction to decide the dispute which had been referred to him. Lord Malcolm also held that the party who maintained that the adjudicator had no jurisdiction was not personally barred from challenging the validity of the decision. Although it adopted different arguments before Lord Malcolm from those adopted before the adjudicator, it was held that it had made it ‘crystal clear’ that it did not accept the jurisdiction of the adjudicator and the fact that it initially adopted the wrong ground of challenge did not have the effect of conferring on the adjudicator a jurisdiction which he did not otherwise have.