Problem: Carpentry contractor problem in agreeing the final account
I am a commercial manager for a carpentry contractor, based in north-east Leicestershire. In July last year, we finished a project in Nottingham, which was for student accommodation. Since completion, we have had major problems in agreeing the final account and we are now looking towards a third party to resolve the account.
The employer has a subsidiary project management company that managed all of the specialist trades, and we were employed directly with the employer. The contract that we were engaged under was not a standard form, but one that was developed in-house by the project management company, and to be honest, it is a bit of a mishmash. The dispute clause makes no mention of adjudication or litigation, although it does refer to arbitration.
Having been a regular reader of your column, I thought that every building contract must have a provision for resolving disputes via adjudication? Although there is no mention of litigation, can we still litigate the matter?
Response: Final account dispute options
Firstly, on adjudication, even if the written terms of a construction contract makes no mention of adjudication, it will be implied into the contract by virtue of the Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and. Construction Act 2009), and no party to a construction contract can opt out of adjudication. If you so wish therefore, you can refer the final account dispute to an adjudicator regardless of whether your written contract includes adjudication. The main advantage of adjudication is that it is quick – usually a 28 day process – and you end up with a court-enforceable adjudication decision.
You can also litigate even though the written contract is silent on this as well. However, if there is a valid arbitration clause, although this will not affect your right to refer the dispute to adjudication, you may be ‘forced’ to arbitrate if you attempt to litigate the matter, because arbitration is a consensual alternative to litigation. There is nothing stopping you from issuing litigation proceedings, but if an arbitration clause is present in the contract, the defendant could apply to the court to stay proceedings and have the matter arbitrated.
If you have genuinely reached an impasse with the employer over the final account, my advice would be to either refer the matter to adjudication or, draft out and send to the employer a Letter of Claim as set out by the Civil Procedure Rules Pre-Action Protocol [for construction and engineering disputes]. If the matter cannot be settled under the Protocol, then you will need to consider issuing an arbitration notice.
© Michael Gerard 2016
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.