Hillcrest Homes Ltd v Beresford and Curbishley Ltd (TCC - 7.2.2014)

The contractors claim for damages under section 2(1) of the Misrepresentation Act 1967 which it referred to adjudication was not a dispute which arose under the contract


Technology and Construction Court

His Honour Judge Philip Raynor QC
7th February 2014

The contractor in its notice of adjudication sought declarations that (i) The developer made a negligent misstatement that the engineer had agreed to its novation to the contractor (ii) That negligent misstatement constituted a misrepresentation entitling it to recover damages and/or loss and expense (iii) Improper pressure had been brought to bear on the engineer by the developer to agree to sign the purported novation agreement after practical completion and (iv) The novation agreement as executed was therefore void. The adjudicator made declarations in the terms sought in (i) and (ii).
Judge Raynor held that a claim for damages for negligent misstatement and/or misrepresentation is not one which "arises under this contract". The contractor’s claim for damages under section 2(1) of the Misrepresentation Act 1967 was therefore not a dispute which arose “under” the contract with the result that the adjudicator did not have jurisdiction to determine that claim. The referral of the claim was in contravention of article 7 of the building contract, which provided for the referral of any dispute or difference arising “under” the contract.
There was considerable force in the developer’s submission that Lord Hoffman’s reasoning in Fiona Trust v Privalov (2007) was inapplicable to adjudication clauses which are present or implied by reason of statutory intervention. The draftsmen of the JCT contract incorporated into the building contract in the instant case had chosen, presumably intentionally, different formulations of disputes that could be referred to adjudication under article 7 and to arbitration under article 8. Article 8 was expressed in much wider terms (namely "any dispute or difference….of any kind whatsoever arising out of or in connection with this contract") than article 7 ("any dispute or difference [arising] under this Contract"). The draftsmen must be taken to have intended that the disputes capable of being referred to arbitration were wider than those capable of being referred to adjudication because the wording of article 7 simply followed that of section 108 of the Construction Act. The claim for damages under section 2(1) of the Misrepresentation Act 1967 was not a claim arising "under this contract" and was instead one arising under the Act.