The part 8 claims
He had therefore reached his decision on an incorrect contractual basis. Oak tried to argue that this made no difference: the adjudicator had evaluated the works in the same way he would have done if the JCT terms had not applied and he had adopted a fair and reasonable approach to evaluation. That it was wrong that the whole valuation process should have to be gone through again in another adjudication that would arrive at the same evaluation. The court had some sympathy with this argument but the court could not rework the decision to fit with a fair and reasonable basis, nor sever those findings that did not fit such an analysis. The adjudicator had proceeded on a contractual basis that did not apply, he had no jurisdiction and his decision could not be enforced.
OD claimed the LOI incorporated the JCT terms at the outset. Oak argued the contrary was the case; and that even if the JCT terms had been incorporated, OD’s Final Payment Notice was invalid as the conclusivity provisions in clause 1.8 of the JCT terms conflicted with clause 4.12 of the JCT terms and s.111 of the Act which left Oak’s own default payment notice to take effect. The court decided that the LOI had not incorporated the JCT terms at the outset. Either the JCT terms were adopted from the start or the LOI terms applied on their own. There was no third way – i.e. that the JCT terms had been adopted pending the execution of the contemplated JCT subcontract. This might have been the case if there was an estoppel by convention but OD did not put its case on that basis. The terms of the LOI applied and the JCT terms were not incorporated. The court declined to make any alternative findings on the hypothesis that the JCT terms had applied. The question whether the conclusive effect of clause 1.8 was inconsistent with clause 4.12 and s. 111 of the Act was a point of some importance that should be decided in a case that turned upon it.
Comment
This was an unfortunate outcome in several respects. It prompted the judge to exhort the parties to look at some form of ADR rather than continue further legal proceedings. There are lessons here for the future. The dangers of proceedings on a LOI without putting the intended contract in place. Ensuring the notice of adjudication and appointment follow the correct contractual basis for the claim. Making sure that a payment notice that might become conclusive is challenged in time.
Where did that leave the adjudication decision?
The adjudicator made his decision on the basis that the JCT terms were incorporated in the LOI, whereas the effect of the court’s ruling on the Part 8 claim was that the LOI did not incorporate the JCT terms.
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