Business common sense – again

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The Trustees of the Marc Gilbard 2009 Settlement Trust v Old Developments and projects Limited [2015] EWHC 70 (TCC)

Facts

The parties entered into a contract which incorporated the JCT Standard Building Contract, Without Quantities, Revision 2 (2009).  Clause 1.9 of the contract provided that the Final Certificate was conclusive evidence of all extensions of time, direct loss and expenses unless proceedings were brought within 28 days of the certificate being issued.

The Contractor wished to dispute the Final Certificate and issued proceedings at court within the 28 day time period.  The matter then proceeded very slowly and, partly due to the Contractor’s delay, a trial date had still not been set over a year later.  In an effort to obtain an interim judgment, the Contractor then proceeded to issue adjudication proceedings.  The Employer sought relief from the adjudication on the basis that the Contractor had not issued adjudication proceedings within 28 days.

Held

The Court found in favour of the Employer.

Mr Justice Coulson held that the “commercial construction” (by reference to business common sense) of clause 1.9 showed that the parties intended to incur costs in relation to only one set of proceedings, ‘not a multiplicity of subsequent proceedings, started months or years later’.  As such, the construction of the clause provided for a single set of proceedings which must be started within 28 days to challenge the Final Certificate.

As a result, the Final Certificate was not conclusive evidence of the matters raised in the court proceedings, but was conclusive evidence in any other proceedings (i.e. the adjudication) brought after the 28 day period.

The argument was made that this approach would be in contravention of the contractor’s right to adjudicate “at any time” under Section 108 of The Housing Grants (Construction and Regeneration) Act 1996.  The Court dismissed this argument.  The right to adjudicate was not fettered by the approach, as the contractor was not prevented from adjudication; the effect was merely that the adjudicator would have to find that the Final Certificate was conclusive evidence in the dispute.

Comment

This case shows the need to carefully consider the provisions agreed in any contract before pursuing a particular course of action.  It is important to ensure that the form of dispute resolution embarked upon is the most appropriate in the circumstances and is not likely to limit your options further down the line or, even more concerning, bar yourself from seeking restitution elsewhere.

It also shows the inclination of the court to take a literal view of the scope of clauses governing timescales and the conclusivity of Final Certificates, and the Judges’ willingness to apply business common sense in the interpretation of those clauses.

For more information, help or advice please contact Rob Langley on 0191 211 7975 or [email protected].