107772.001 SH Construction Case Booklet

Before the Court Skymist contended that Mr Riches was nominated by the wrong ANB and had no jurisdiction. He was nominated by the wrong ANB because: 1. By his decision Mr Riches had found the relevant contract was the DOA or at least a contract that included a clause naming the CIArb as the ANB; 2. Even if that was not so, Grandlane had “approbated and reprobated” the DOA in relying on it or version of it, whilst not following the ANB clause. Thus the decision was a nullity for want of jurisdiction. The following relevant facts were found by the Court. There was a contract between the parties. A document called the Development Management Agreement–Beaurepaire General Terms and Conditions (TC) evidenced the key terms, services and remuneration. The DOA was a 50-page document heavily revised and redrafted with a final iteration dated 9 December 2016. It was never signed and there was no evidence its term were ever agreed by both parties. Clause 7.10 contained a contractual rate of interest. Clause 12 permitted Skymist to terminate and clause 13 provided for summary termination. Clause 14 provided for adjudication in accordance with the Scheme and that the ANB was the CIArb. The termination letter sent by Skymist alleged the contract included the TC, and it was entitled to terminate for alleged repudiatory breach by Grandlane, alternatively it was entitled to terminate at will. Grandlane denied its breach, alleged Skymist was in repudiatory breach but did not claim damages as a result. Grandlane claimed £620,000 being 5% of the construction costs less payment on account (claim 1). This element of the claim was agreed. 0.5% for procuring permits, giving them £62,000 as found by the adjudicator (claim 2). Payment of monies paid to third parties. The adjudicator found Grandlane was entitled to such payments whether it had paid the third parties or not (claim 3). The Court reviewed the notice of adjudication (NOA) and concluded it was not clear which contract was being relied on by Grandlane. Objectively viewed, the NOA did not mean Grandlane was relying on the DOA. It did not rely on the adjudication provision but the Scheme. Its claim for interest was not made under the contractual provision of the DOA. Indeed in their letter of application to the RICS Grandlane’s lawyers said they now accepted there was no contract specifying CIArb as the ANB.

On analysis the Referral did not show that Grandlane had adopted the terms of the DOA in their entirety but were in fact relying on the few terms, actually relevant to the dispute, and not including in particular the terms as to interest or adjudication. It alleged a contract based on some of the terms of the DOA and other terms, none of which in the end were disputed as applying or were necessary to the resolution of the dispute. The adjudicator found that Grandlane was relying on the DOA and Skymist was not, but qualified this by noting there was common ground over some of the terms and that it was common ground that the Scheme applied. By the time the adjudicator came to make his decision claim 1 was not agreed; the only issue on claim 2 was whether the percentage of 0.5 was applied to the value of property or the construction cost. 7. Natural Justice – Construction of Contract Term – Imported Issue Synergy Gas Services Ltd v Northern Gas Heating Ltd 15 The claimant applied for summary judgment in respect of an adjudicator’s decision in its favour. The parties had entered into a sub-contract, clause 14.4 of which provided that if the defendant decided that any works done by the claimant were defective, it had to notify the claimant of the defects and specify details. If the claimant failed to make good the defects, the defendant could rectify them itself and recover the costs from the claimant. A dispute arose over the defendant’s alleged failure to pay invoices, and the claimant referred the dispute to adjudication. The defendant’s response alleged a breach of clause 14.4, namely the claimant’s failure to rectify defects, and claimed a set-off. The claimant denied that allegation and submitted Scott schedules responding to each alleged defect and noting that it had not been given the opportunity to make them good. The adjudicator considered that the interpretation of clause 14.4 was an issue, and found that the notification of defects was a precondition to setting off. As the defendant had not notified the claimant of the alleged defects, it could not claim a set-off. The adjudicator ordered the defendant to pay the claimant over £74,000. The defendant sent a cheque for around £45,700, so the claimant brought the instant application to enforce the decision in respect of the balance. The defendant submitted that the decision breached natural justice as the claimant had not argued that clause 14.4 was a precondition to set-off, and the adjudicator had not raised it with the parties, so the defendant had not been given the opportunity to address it.


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