The courts get tough!


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Some recent judicial decisions in the Technology and Construction Court show the court is taking a less compromising attitude to litigants.

In the case of Venulum Property Investments Limited v Space Architecture Limited and others, Venulum had failed, by a mistake, to serve its particulars of claim within the time limits allowed by the court. The particulars of claim were served only a few days later, but by then the limitation period for commencing a court action had expired. One of the defendants refused to agree that time could be extended. Venulum applied to the court for the court to exercise its discretion and allow the late service but permission was refused. The court relied on the change of the Civil Procedure Rules on 1 April 2013, which now emphasise that it is part of the overriding objective of the court procedures that the court should enforce compliance with rules, practice directions and court orders.

Particularly in the Technology and Construction Court, where there has been a tendency to tolerance and compromise, this represents quite a wind change.

In Westshield Civil Engineering v Buckingham Group Contracting, Buckingham Group had been found liable to pay Westshield money following an adjudicator’s decision. The decision was not accepted by Buckingham Group and Buckingham applied for permission to delay payment of the adjudicator’s decision pending the dispute being heard by the courts, on the ground that Westshield was insolvent. The court refused. The court’s reasoning was that Buckingham had known Westshield was in financial difficulties at the date of the contract, and it would not allow non payment of the adjudicator’s award in circumstances where Buckingham had always known of Westshield’s difficulties.

There are many reasons why a contract is entered into with a party that is not strong financially. In the light of this decision, it would be sensible to include some provision in the contract to deal with situations where money might have to be paid to an insolvent party and then subsequently recovered.

The time limit for bringing a claim for breach of contract is six years if the contract is under hand or 12 years if the contract is under seal. Where an adjudicator has made a decision, his decision is enforced as a term of the contract and therefore it is assumed, although not explicit in the Housing Grants, Construction and Regeneration Act 1996, that the same six/12 year limitation period applies to enforce an adjudicator’s decision.

However, the existence of an adjudicator’s decision, or the need to enforce it, does not delay the start of the limitation period in respect of the underlying dispute.

In Aspect Contracts v Higgs Construction, an adjudicator’s decision was sought some time after completion of the works. Aspect paid the amount awarded by the adjudicator but subsequently applied for restitution of the sum it had paid pursuant to the decision, and therefore effectively required the court to re-hear the underlying dispute. By then the limitation period to commence proceedings in respect of the underlying dispute had expired, but Aspect argued that time had begun to run again from the date of the adjudicator’s decision.

Not so, said the courts. The time to bring a claim in the courts in respect of any breach of contract runs from the breach and is not affected by an adjudication. The moral of the story is not to be distracted by the existence of an adjudication if there is any possibility of the limitation period for commencing proceedings expiring.

Frances Alderson, Partner, Fladgate LLP (falderson@fladgate.com)

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