11 August 2016

Shulmans assists GDL in enforcing adjudicator’s decision

The majority of disputes in the construction industry are caused, and indeed aggravated, by a lack of clarity in relation to the contractual obligations and/or the technical specifications.

Given this knowledge, it is unclear why anyone involved in the construction industry would undertake any work without having the necessary contracts in place.  However, given that all projects are time critical and price sensitive, it is probably no surprise that they start and continue without the contracts in place. 

The recent case of Ground Developments Ltd v FCC Construccion SA & Others [2016], which was heard in front of Mr Justice Fraser in the Technology and Construction Court (TCC), highlighted how failing to agree a contract could have expensive consequences; it also reiterated that the Court will support the adjudication process and take a robust approach to the enforcement of adjudicator’s awards.

The Shulmans construction team was involved in this case, representing the winning party both in the adjudication and in the enforcement of the adjudicator’s award.

The MerseyLink Civil Contractors JV (MCCJV) is a consortium of three separate contractors who have come together to deliver the £1.8 billion Mersey Gateway Project.  The MCCJV hired Ground Developments Ltd (GDL) to design and carry out specialist ground works.

Although the parties attempted to agree the terms of a contract (based on the standard form NEC3 Sub Contract) to govern the relationship between them, the terms and conditions were never agreed so as to establish such a contract. In addition, the specification of the works not finalised before GDL went on site.

Despite GDL setting out the works in several letters to the MCCJV, no formal arrangements were made. GDL were forced to leave the site as they could no longer continue without this clarity. They made an application for payment of the works carried out to date at a figure of £198,008.90 plus VAT. 

Despite GDL’s efforts to negotiate a settlement, the MCCJV refused to make payment, so GDL had no choice but to refer the matter to an adjudicator, who awarded GDL the full amount. The MCCJV refused to accept that the adjudicator had the necessary jurisdiction to deal with the dispute, consequently GDL had to raise an enforcement action against the MCCJV seeking payment. 

The MCCJV challenged GDL’s application by providing the Court with seven defences, all of which were rejected by the Judge. Each defence had a similar theme - that there was “uncertainty” as to the nature of the contractual issue between the parties.

The Judge criticised the MCCJV’s tactical approach to avoiding payment both of the application for payment and the adjudicator’s award. 

However, the overall lesson to be learned from such proceedings is that all parties should ensure that when embarking on construction work the terms of their contract are agreed. Unless one party is able to point to a very clear contractual agreement, it will always be open to the other party to run arguments against payment, even where these arguments can be of a spurious nature.

The Shulmans construction team, headed by Associate Phil Morrison, assisted GDL throughout the Mersey Gateway Project. They assisted in negotiating the contract that was to be put in place, and also provided them with the necessary support and advice when GDL decided that they could no longer progress with the works. The team then represented the company both in the adjudication and in the enforcement of the adjudicator’s award.

Phil Morrison says: “I am delighted to have acted for GDL for a number of years in various different matters. In this instance, despite GDL and our best efforts, we were unfortunately unable to negotiate a reasonable settlement with MCCJV. However, in spite of what the Judge called MCCJV’s ‘tactical defence’, GDL’s position and the legal advice they received was vindicated in the end.”

Adjudications allow parties to resolve disputes without having to resort to going to Court, which can be a lengthy and expensive process. The Shulmans construction team has extensive experience in representing both referring and responding parties in adjudication, so we can assist you if you are involved in a dispute.

Further details about this case can be found at: