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Finality Achieved At Last in Intractable Building Contract Dispute

Construction siteConstruction projects sadly do not always run smoothly and, in one case, developers and a contractor fell out so badly that no less than five adjudications and two High Court hearings were required to achieve a final resolution.

The contractor had been engaged to construct and fit out two new residential houses but a deterioration in relations led to work coming to a standstill six months into the project. The dispute was referred for adjudication and, in a series of three awards, the developers were ordered to pay the contractor more than £650,000.

Following a fourth adjudication, which was convened to determine the proper value of the work done, the contractor was ordered to repay more than £325,000 to the developers. However, after a High Court hearing, a judge declined to enforce that decision on the basis of an appearance of bias on the part of the adjudicator.

A fifth adjudication ensued, after which the contractor was ordered to pay £296,006 by way of repayment of sums overpaid in respect of the works. That award, too, was challenged in the High Court by the contractor on various grounds. The Court accepted that the adjudicator’s decision in respect of certain design fees was in excess of jurisdiction and reduced the award by £6,049. All other aspects of the contractor’s challenge were, however, dismissed.

The Court rejected arguments that the adjudicator’s award was a nullity, having been reached outside the 28-day time limit laid down by the Scheme for Construction Contracts (England and Wales) Regulations 1998. Arguments that the adjudicator, like his predecessor, had given an appearance of bias were also dismissed.