Adjudication decisions have interim binding effect; that is, they stand until (and unless) the outcome is reversed by a court (or other tribunal, if the parties agree). After an adjudication, parties can be left in an uncertain position – unsure as to whether their opponents consider the adjudicated dispute to be concluded, or whether the adjudication outcome might be revisited in court (or arbitration) later.
To combat this potential for uncertainty, construction contracts often set out steps that must be taken after an adjudication, if a party wishes to have the outcome reviewed in further proceedings. Some contracts require that party to serve a notice of dissatisfaction within a specified timeframe after the adjudication decision. The timeframe, form, content and method of service of the notice will generally be prescribed by the contract.
In Transport for Greater Manchester v Kier Construction Limited (t/a Kier Construction - Northern), the Technology and Construction Court (TCC) considered whether a notice of dissatisfaction complied with the strict contractual provisions in the parties’ construction contract, which was based on NEC conditions. If it did not, the adjudication decision was (permanently) binding and the outcome could not be reviewed in court.
Background
Kier Construction Limited (Kier) was engaged by Transport for Greater Manchester (TfGM) to design and construct a bus interchange in Bolton. Kier applied for an extension to the contractual completion date for its works, which TfGM rejected. The dispute was referred to adjudication, in which Kier was successful. TfGM made payment of the sums awarded by the adjudicator, but purported to reserve various rights, and issued a notice of dissatisfaction.
TfGM then commenced court proceedings, seeking a declaration that the adjudicator had erred in law, and claiming repayment of the sums awarded in the adjudication.
The current issue
Kier sought a declaration that the TCC had no jurisdiction to hear TfGM’s claim.
Kier’s argument related to the notice of dissatisfaction issued by TfGM. Kier argued (amongst other things) that the notice of dissatisfaction was invalidly issued because it was issued to Kier’s solicitors rather than to Kier directly. This argument was based on the contract, which provided that contractual notifications had to be issued to a specific, stated contact unless alternative contact details had been notified.
TfGM argued (amongst other things) that Kier had authorised communications regarding the adjudication being issued through its solicitors; that Kier’s adjudication submissions identified Kier’s solicitors as its representatives in the adjudication, and provided their contact details for receiving communications; and that issuing a notice of dissatisfaction to Kier’s solicitor was therefore valid for the purposes of the contract.
The contract required a notice of dissatisfaction to be served within four weeks of an adjudication decision, if a party wished to preserve its right to challenge the outcome. If Kier was correct that the notice of dissatisfaction was invalidly issued, then this contractual requirement had not been met.
The TCC’s decision
The TCC held that there had been sufficient notification for the purposes of the contract that the address for Kier’s solicitors would be the address for service of communications in respect of the adjudication. It was noted that TfGM similarly issued all adjudication correspondence through its representative and that neither party had objected to the other proceeding in this way.
The notice of dissatisfaction issued by TfGM was therefore valid, and TfGM’s challenge to the adjudication decision could therefore continue.
Points to take away
It is important to always be aware of contractual requirements regarding notifications. A failure to follow these can invalidate a notice, which may have significant consequences.
If there is doubt as to where, to whom, or how a contractual notice should be issued, a reasonable approach may be to issue duplicate notices.
The TCC’s decision in this matter was dependent on the precise wording of the contractual clauses in question and the wording of correspondence between TfGM and Kier. Disputes such as this are often dependent on the precise contractual wording and factual circumstances that apply.
For tailored advice on this or another related matter, please contact Iain Drummond or Eilidh Drummond, of our property and infratructure disputes team, or your usual Shepherd and Wedderburn contact.