In
Cubitt Building & Interiors Ltd v Richardson Roofing (Industrial) Ltd [2008]
EWHC 1020 (TCC) Mr Justice Akenhead considered the not unfamiliar
"battle of the forms" to establish whether there was a binding
agreement to adjudicate or only a right to do so. The main adjudication issue was whether the tribunal of
final jurisdiction should stay the proceedings to enable adjudication to take
place.
Incorporation of Terms
Akenhead J held that the fact that a letter was described as a "Letter of
Intent" does not particularly add anything to its legal status. he relied on
British Steel Corporation v Cleveland Bridge & Engineering Co. [1981] 24BLR94
for the proposition that letters of intent can evidence or create a contract
where none exist or simply be an indication that a party intends in the future
to enter into a contract with the other party. It was necessary to analyse in
terms of offer and acceptance what if anything was agreed by or what agreement
was evidenced by the letter of intent in question.
It was held that the standard terms and conditions referred to on Cubitt's order were not attached, as the Order suggests that they were, and therefore Cubitt standard terms were not incorporated.
The fact that, in the letter of intent, Cubitt indicated that it was the
intention to enter into a "formal" subcontract in the future did not undermine
the legal effect and purpose of the first paragraph in the letter which
effectively was an acceptance of the most recently revised quotation. The fact
that the letter indicated that when a formal subcontract was entered into the
letter of intent provisions in effect lapsed was likely to be a statement of the
obvious. The second paragraph itself indicated that until a formal contract was
entered into the letter itself would have "effect" which was considered must be
legal effect.
It was held relying on Chitty on Contracts terms may be incorporated by
reference provided that reasonable notice is given particularly in relation to
onerous terms. There was at least one onerous term, in Cubitt's terms, which was not in the standard DOM/1 contracts, namely a conditions precedent clause.
It was observed that in Poseidon Freight Forwarding Ltd. v Davies Turner
Southern Ltd. [1996] 2LLR388, there was a reference on the faxed order to
conditions set out on the back of the document but which were not in fact faxed.
That was insufficient to allow for incorporation since that was not a case of
terms available for inspection. The fact the terms were not sent was considered
cogent evidence of an intention not to incorporate. Adopting that approach,
Akenhead held that the fact that the proforma part of the order stated that the Cubitt standard terms were "attached" and they were not attached, pointed conclusively, simply as a matter of construction, to the proposition that the parties objectively did not intend that those standard terms should be incorporated.
It followed that the subcontract between the parties incorporated the DOM/1
conditions including the provisions for an arbitration set out in the DOM/1 form
of sub-contract. It also followed that that the sub-contract did not incorporat
Cubitt's standard terms and the pre condition in those standard terms that any
court litigation must be preceded by adjudication.
Stay
Cubitt argued that if the Subcontract contained an arbitration clause, as
indeed was decided, that
it was first entitled to an adjudication of the dispute pursuant to
Section 108 of the Housing Grants Construction and Regeneration Act 1996 and the
Court had an inherent discretion to stay arbitral proceedings whilst such an
adjudication took place.
It was held that as a matter of construction both of the DOM/1 contract conditions and the Housing Grants Construction and Regeneration Act 1996 there was no pre-condition or indeed obligation requiring either party to refer any disputes to adjudication. There is simply a right on a party to proceed to adjudication at any time if it so wishes. That is to be contrasted with a binding agreement to adjudicate.
Reference was made to
DGT Steel & Cladding Ltd v Cubitt Building & Interiors Ltd [2007] EWHC 1584
(TCC), but Akenhead J considered that was primarily concerned with what
the court was to do or might do faced with a binding agreement to adjudicate. In
the instant case there was no binding agreement to adjudicate. There was an
agreement between the parties whereby either party could, at its own option,
refer a matter to adjudication but there was no obligation on the party in
question to refer the matter to adjudication.
Nonetheless it was observed that it may be appropriate in certain circumstances to build into the timetable in court or arbitration proceedings a 28-day period to enable one party to adjudicate if, for any good reason, it cannot sensibly pursue adjudication at the same time as its court or arbitration proceedings, but that is different from a stay. A party should not be forced to have Court or arbitration proceedings delayed or stayed by being forced to adjudicate when it does not want to exercise its right to do so. In this case it was held that the question of whether or not there should be a stay was not a matter which the Court could consider but entirely a matter for the arbitrator.
Judgment
The injunction to restrain continuation of an arbitration so that adjudication should proceed before any further proceedings, was refused. | 