The recent decision of the Technology and Construction Court (TCC) in Taylor Wimpey UK Ltd v Harron Homes Ltd is a reminder of the importance of complying with contractual dispute resolution clauses.
The case
The parties owned adjacent development properties and entered into an agreement regarding drainage. Their agreement provided that if a dispute were to arise on specific matters it would be decided by expert determination (in which an expert appointed by the parties considers a dispute and reaches a decision; a process often far quicker and less costly than litigation).
After a dispute arose, Harron Homes served a formal notice on Taylor Wimpey in order to begin an expert determination. Despite this, and the prior agreement that disputes would be decided by expert determination, Taylor Wimpey applied to the TCC to require Harron Homes to disclose documentation relevant to the dispute.
The TCC’s decision
The TCC refused Taylor Wimpey’s application. Among the factors considered significant were:
- the existence of the expert determination clause;
- that Harron Homes had taken steps to begin an expert determination;
- that the documentation sought by Taylor Wimpey would have been obtainable within the expert determination process;
- that there was evidence that Taylor Wimpey was attempting to avoid expert determination (by refusing to agree to the appointment of an expert); and
- that Taylor Wimpey had not previously sought the documentation.
In its decision the TCC makes clear that it will give short shrift to applications that attempt to “frustrate, impede or interfere” with contractually agreed dispute resolution mechanisms.
Although the TCC is an English court, its decisions are persuasive in Scotland. The Scottish courts would be likely to take a similar approach.
What can we take away?
- Be aware of dispute resolution clauses in your contracts. Do they provide a mechanism for dispute resolution that works for your business? By the time a dispute arises it is likely to be too late to make a change.
- If a dispute arises, ensure that you comply with any relevant dispute resolution clauses. Even if you are not actively attempting to avoid a contractual dispute resolution mechanism, accidental non-compliance may be subject to challenge. A challenge at the very least is an extra hurdle to resolving your dispute, and may lead to considerable cost.
- Most binding dispute resolution processes allow for the disclosure of documents. If this is not available, court-ordered disclosure is more likely to be possible.
This article was produced with additional reporting from Eilidh Dobson.