Earls Terrace Properties Ltd v Waterloo Investments Ltd

The effect of the deed of variation between the developer and the employer entered into after the Construction Act 1996 came into force, which varied the fee related provisions of the services agreement entered into before that date, was not that the Act applied to the services agreement
 
EARLS TERRACE PROPERTIES LTD v WATERLOO INVESTMENTS LTD

Technology and Construction Court
His Honour Judge Richard Seymour QC
14 February 2002
 

The services agreement entered into between the employer and the developer before the Construction Act 1996 came into force was a “construction contract” albeit that the Act did not apply to the agreement insofar as section 104(6) provided that the Act only applied to “construction contracts” entered into after the Act came into force. A deed of variation was entered into after the Act came into force which (only) varied the services agreement in relation to the payment of fees to the developer. A dispute arose as to the fees properly payable. The developer served a notice of adjudication. The employer issued court proceedings seeking declarations that the deed of variation was not a construction contract within the meaning of the Act with the result that the adjudicator had no jurisdiction.

 

Judge Seymour held that the effect of the deed of variation was not to bring the services agreement within the scope of the Act. Section 104(6) provided that the Act’s adjudication provisions were only to apply to “construction contracts” entered into after the Act came into force and Parliament therefore seemed deliberately to have wished not to bring within the scope of the Act contracts which were made at a time when the parties could not have envisaged that compulsory adjudication would be thrust upon them. Whilst it was possible to contemplate an agreement entered into after the Act came into force varying a “construction contract” entered into before the Act came into force with the results that the Act probably applied to the agreement and possibly applied to the construction contract itself, in the instant case the variations were simply to sums of money payable in respect of services which had not been altered and which were to be provided over a period which could accurately be described as however long it took for the developer to provide them.

 

Advice Note

It is probable that the Construction Act will apply to an agreement entered into after the date on which the Act came into force varying a construction contract entered into before that date. It is possible in such circumstances that the Act will apply to the construction contract itself.
 

Download