Khurana v Webster Construction Ltd (TCC - 20.3.2015)

Khurana v Webster Construction Ltd (TCC - 20.3.2015)

The agreement for adjudication was one for adjudication under the Scheme for Construction Contracts save that the decision was to have a permanently binding effect so as to preclude a court from subsequently resolving the same dispute
 

KHURANA V WEBSTER CONSTRUCTION LTD

TECHNOLOGY AND CONSTRUCTION COURT

HIS HONOUR JUDGE STEPHEN DAVIES

20TH MARCH 2015

 
 

The contractor’s solicitors served statutory demands on the homeowners alleging that they owed the contractor a specified sum. The homeowners’ solicitors challenged sum claimed and invited the contractor to appoint an independent quantity surveyor to resolve the disputed claim in the event that it could not be resolved by negotiation. The contractor’s solicitors agreed to this invitation in principle and proposed that the procedure should be conducted in accordance with the Scheme for Construction Contracts save that the surveyor’s decision was to be binding on the parties. The homeowners’ solicitors agreed with these proposals on the basis that the quantity surveyor’s decision was to be binding on both parties. Negotiations proved unsuccessful and the surveyor in the resulting adjudication awarded the contractor a specified sum. The homeowners began court proceedings to overturn the surveyor’s decision. The contractor contended that the agreement for adjudication had the effect that the surveyor’s decision was final and binding.

 

Judge Davies agreed with the contractor’s contention. The key context was that both parties had to be taken to have been aware that the proposal for an adjudication under the Scheme for Construction Contracts carried with it an implicit but obvious proposal that the decision would be only temporarily binding unless expressly stated to the contrary. The words "save that the decision … shall be binding on the parties" proposed by the contractor’s solicitors could only sensibly have been intended to derogate from that default provision. The reasonable observer would have been in no doubt that the only sensible reason for the contractor’s solicitors using the words "save that the decision … shall be binding on the parties" was to make clear that if their proposal was accepted (i) The adjudicator's decision would be permanently as opposed to temporarily binding in contrast to the position under a Scheme adjudication and (ii) The losing party to such an adjudication could not subsequently elect to re-run the whole dispute afresh in legal proceedings. In those circumstances there could be no criticism that the effect of the agreement as put forward by the contractor’s solicitors was not made sufficiently clear to the homeowners’ solicitors.

 

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