This judgment was handed down in December 2018 but only recently reported.
Mr and Mrs Finegold engaged Sitol, a specialist ceramic and tiling company, to undertake tiling work as part of a much larger refurbishment and building project on their home in Hampstead.
A dispute arose between the parties and in a subsequent adjudication, Sitol was awarded £44, 838.38, that being the outstanding sum for the services it provided. The present case concerns an application by Sitol for summary judgment in order to enforce the adjudication award.
The Finegolds resisted enforcement on two grounds:
- First that there was no contract between the Finegolds and Sitol. Rather, the employer was the main contractor: Proman.
- Second, in the alternative, that the dispute had been referred to the adjudicator too late.
Waksman J, in the TCC, rejected the application for summary judgment and held that the second defence succeeded. The referral to adjudication was out of time.
In respect of the first defence, it was argued by the Finegolds that Promon was engaged as a main contracting party. Both parties knew that Proman would not be providing the contractual services itself but would do so via Sitol.
However, Waksman J found that the contract between the Finegolds and Proman was a project management contract. Proman was not a main contracting party but the project manager. The services provided by Proman were project management services such as contract administration and managing the contractors bills.
There was a NEC contract between Sitol and the Finegolds which described that Sitol would provide tiling services for the latter. Although the contract had been communicated to Proman first, there was no doubt that Proman was acting on behalf of the Finegolds. It was therefore clear that there was a contractual relationship between Sitol and the Finegolds and this defence did not succeed.
The second defence that was relied upon was that Sitol was out of time when it referred the dispute to adjudication. This defence relied on clause 93.3 of the standard form NEC3 Engineering and Construction Short Contract which provided:
“A party may refer a dispute to the adjudicator if
- the party notified the other party of the dispute within four weeks of becoming aware of it and
- between two and four further weeks have passed since the notification.”
According to the Finegolds, they were notified by Sitol that the dispute would be referred to adjudication no earlier than 25 April. However, the dispute had allegedly arisen by 19 February, and so latest date of notification was 19 March, which they had missed. Sitol, argued on the other hand that they only became aware of the dispute on the 4 April such that their notification was still within time.
Waksman J found in favour of the Finegolds. Applying the test in Amec v Secretary of State for Transport  EWHC 2339, the key proposition was that a dispute does not arise until it emerges that a claim is not admitted.
On the facts, Sitol had sent in an invoice for unpaid fees on 23 January. Not only did the fees remain unpaid but there was an express rejection of the claim when the Finegolds’ solicitors wrote a letter in reply on 19 February. The dispute must have arisen on 19 February because it was made clear at that point that the Finegolds believed that they were only under a contractual relationship with Proman and that any future requests for payment had to be directed to Proman.
It was also irrelevant that there was an invitation from the Finegolds for evidence to be produced to show that they were wrong, or that they recommended Sitol to take independent legal advice in respect of their position.
As Waksman J states at paragraph : “It is simply not the law that a dispute does not arise until the arguments going backwards and forward between the parties have gone down the line to some extent or other or that some avenue for resolving it has to be resolved first. The fact that one party says, ‘I am interested to see what evidence you have got, although I deny your claim,’ does not mean there is no dispute.”
Finally, clause 93.3 emphasises that the other party to the dispute had to have become ‘aware’ of the dispute. However Waksman J rejected the possibility that awareness here could be wholly subjective. Otherwise a party could simply fail to open a letter and time would not start running. Instead time would have to start running when objectively, the dispute had been brought to the party’s attention. In this case the dispute arose on the 19 February when the letter had been received.
Since the dispute had crystallised by 19 February and the expiry date was 19 March, it followed that the adjudication was out of time.
The main take away from this case is that the TCC has confirmed the effectiveness of adjudication time bars in NEC. Although clause 93.3 and similar time bar provisions in NEC are not applicable where the Construction Act applies, they will need to be considered in non-Construction Act contracts such as excluded operations and domestic projects.
Where a claimant is party to the NEC suite of contracts, and the Construction Act does not apply, there will be considerable time pressure. Notification must be brought within one month of the dispute arising so as to ensure that adjudication can occur within the time limit.