L Brown & Sons Ltd v Crosby Homes (North West) Ltd

The adjudicator had jurisdiction over disputes that arose under the parties' side agreements which had been entered into after the underlying building contract itself had been entered into and which introduced a bonus system and waived the payment of liquidated damages
 
L BROWN & SONS LTD v CROSBY HOMES (NORTH WEST) LTD

Technology and Construction Court
Ramsey J
5 December 2005
 
The contract incorporated JCT 98. Article 5 of JCT 98 provided that if any dispute or difference arose under the contract, either party could refer it to adjudication in accordance with clause 39A. Clause 39A.1 of JCT 98 was amended by the addition of “out of or in connection with” so as to provide that clause 39A applied where, pursuant to article 5, either party referred any dispute or difference arising under, out of or in connection with the contract to adjudication. The parties entered into side agreements after the underlying building contract itself had been entered into which introduced a bonus system and waived the payment of liquidated damages. Disputes arose in relation to the side agreements that were referred to adjudication. The adjudicator made a decision in the contractor’s favour. The contractor began court proceedings to enforce the decision.
 
Ramsey J held that the adjudicator did have jurisdiction over the disputes with the result that the decision should be enforced. The amendment to clause 30A.1 of JCT 98 had the effect that an adjudicator had jurisdiction over disputes arising under, out of or in connection with the contract notwithstanding that a similar amendment had not been made to article 5. This was on the basis that the parties intended to broaden the scope of the adjudication and that the court should give effect to that intention. The side agreements were variations of the underlying contract because whilst the relevant provisions in the agreements did not expressly refer to particular provisions in the underlying contract as having been varied, the introduction of a bonus system and the waiver of liquidated damages did vary the contract. Whilst side or supplemental agreements, as in the instant case, frequently did not have their own provisions for dispute resolution, including adjudication, the idea that different or no dispute resolution methods applied to such additional changed obligations would have been an impossible situation and would have made adjudication unworkable. The disputes were therefore “under” the underlying contract and were subject to adjudication. Even if the side agreements were separate obligations (and were not variations of the underlying contract), the disputes arose “out of or in connection with” the contract.

 
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