Background
ISG Retail Limited (ISG) had engaged GK Construction Limited (GK) under a subcontract to carry out roofing and cladding works on a project in Bristol. A dispute regarding FK's application for payment arose and was referred to adjudication. The adjudication culminated in a decision in favour of FK and FK was granted an extension of time and its prolongation costs.
ISG sought to challenge the adjudicator's decision in the TCC by way of a Part 8 claim. ISG argued that FK had failed to comply with a condition precedent in relation to its EOT claim. FK denied non-compliance and asserted that ISG was estopped from relying on the condition precedent clause and/or had waived any entitlement to do so. FK's position was that compliance with the condition precedent was sometimes achieved by way of correspondence and/or discussion on site and not necessarily by Early Warning Notices. Consequently, the Part 8 proceedings were not a suitable means for determining the issues because further consideration and analysis was required of this evidence that had not been put before the Court.
Judgement
The court determined that the proceedings were not suitable for Part 8 determination because of a likely substantial dispute of fact regarding breach of the condition precedent and the potential application of waiver or estoppel.
The court further declined to make any declarations sought by ISG and invited the parties to consider continuing the claim under Part 7 for a final resolution on the contractual issues raised.
In justification of its decision, the court reminded the parties that:
- Part 8 claims are appropriate when the issue is unlikely to involve a substantial dispute of fact and where there are discrete issues of 'pure' contractual construction, such as whether a clause is a condition precedent;
- it would be appropriate for Part 8 proceedings to be brought where "the balance of an adjudicator's decision is uncontentious"; and
- arguments on waiver and estoppel are likely to involve substantial disputes of fact and need to be properly pleaded out.
Going forward
This judgement is a reminder to parties seeking to challenge an adjudicator's decision that the complexities involved in construction disputes often mean that issues of fact can be more contentious than at first glance. Common law arguments such as waiver and estoppel along with contractual arguments such as compliance with the notice provisions are fought on the facts and if such arguments are not properly dealt with in the adjudicator's decision, resorting to a Part 8 claim is unlikely to be a suitable option for resolution of the same.
You can read the full Judgment here.
