Aveat Heating Ltd v Jerram Falkus Construction Ltd

The non-compliance of one of the adjudication provisions in clause 38A.5 in the GC/Works Sub-Contract with section 108(2)(c) had the effect under section 108(5) that the Scheme for Construction Contracts replaced the adjudication procedure in the GC/Works Sub-Contract in its entirety
 
AVEAT HEATING LTD v JERRAM FALKUS CONSTRUCTION LTD

Technology and Construction Court
His Honour Judge Richard Havery QC
1 February 2007
 
The sub-contract incorporated the GC/Works Sub-Contract. Clause 38A.5 of the adjudication procedure in this sub-contract did not comply with section 108(2)(c) of the Construction Act (by providing that the adjudicator's decision was valid notwithstanding having been issued after the time allowed). Section 108(5) provided that if the contract did not comply with the requirements of section 108(1) to (4), the adjudication provisions of the Scheme for Construction Contracts were to apply. The issue to be determined by Judge Havery was whether this non-compliance meant that the adjudication provisions of the Scheme applied in their entirety (so that the adjudication procedure of the GC/Works Sub-Contract was considered void and was replaced in its entirety by the Scheme) or whether only the "non-compliant" provisions of the adjudication procedure of the GC/Works Sub-Contract should be so replaced.
 
Judge Havery came to the conclusion that the adjudication provisions of the Scheme for Construction Contracts replaced the adjudication procedure of the GC/Works Sub-Contract in its entirety. The judge in reaching this conclusion cited with approval a passage in Keating on Construction Contracts which stated that (1) the extent to which the contractual adjudication procedure did not comply with the Construction Act was irrelevant and (2) if the contractual adjudication procedure was non-compliant, the whole contractual mechanism was tainted and replaced by the Scheme for Construction Contracts. The judge pointed out that whilst section 108(5) did not say that a non-compliant contractual adjudication procedure was void in the event of the Scheme for Construction Contracts applying, in the event of the procedure not being void (1) such a procedure contained competing and to some extent mutually contradictory provisions and (2) sense could only be made of the procedure if only one member of every pair of mutually contradictory provisions was treated in any given case as prevailing over the other. Such a position might well have led to confusion and uncertainty over which adjudication procedure applied. Furthermore if the parties in the instant case had intended to have their own private non-compliant adjudication procedure (necessarily in addition to an express or implied compliant procedure), that would surely have been expressed in the contract but no such intention appeared in the GC/Works Sub-Contract.
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