HGCR Act 1996 - Determination of the Contract

© Daniel Atkinson 2001 02 October 2001

SUMMARY

If there is a dispute which is to be adjudicated under the terms of the contract, then the adjudication provisions remained operative on determination of the contract.

The contract may come to an end in a number of ways. The Employer may operate the termination clause under the contract and expel the contractor from the site, or there may have been a breach by the Employer that strikes at the very root of the Contract so that the Contractor is no longer bound to perform. The decision in A&D Maintenance and Construction Ltd v Pagehurst Construction Services Ltd (June 99) TCC gives guidance.

A&D was a subcontractor carrying out building works on a school for Pagehurst as main contractor. The date stated in the contract for completion was 4^th October 1998 and no extension of time had been requested by A&D and none had been given. The work was not completed on the appointed date. On 28^th October 1998 Pagehurst gave notice that unless the work was completed by 9^th November 1998 they would terminate A&D’s employment under the contract. Pagehurst itself received a notice from the Employer that the subcontract works were in serious delay. On 19^th November 1998 the Employer terminated the employment of Pagehurst under the main contract and on the same day Pagehurst attempted to terminate A&D’s employment under the subcontract. Pagehurst also gave notice to A&D that it would withhold further payments. Adjudication was commenced by A&D and a decision given in its favour for the payment of A&D’s outstanding invoices. Pagehurst failed to comply with the Adjudicator’s decision and A&D applied for summary judgment under Court Procedure Rule 24.

Pagehurst argued that because the subcontract had been brought to an end that adjudication was no longer the appropriate process for resolving the disputes between A&D and Pagehurst. It was also argued that the process of adjudication was intended mainly for minor disputes during the course of the contract. In this case there were several complicated issues. In addition there were other parties involved including insurers due to the fire which had broken out on 28^th November 1998 causing extensive damage to the school. It was argued therefore that litigation was the most appropriate process to deal with these inter-related and complicated issues.

The Court would have none of this. It was assumed that the SubContract had come to an end on 19^th November 1998 for the purpose of the summary proceedings. Even in that case the matters referred to the Adjudicator remained disputes under the contract. If there were disputes arising out of a contract which were to be adjudicated, then the adjudication provisions remained operative in much the same way as an arbitration clause remained operative by analogy with the decision in Heyman v Darwin (1942). Whereas Parliament had provided precise time limits for the appointment of adjudicators and the timetable for the process, there were no such limits on the time when a party could refer a matter to adjudication. The position with regard to arbitration was clearly in the minds of the legislators when the adjudication provisions had been enacted.