Case law: Blowing hot and blowing cold (principle of election)

Lawrence Davies of Pinsent Masons, reports on a recent enforcement case where the principle of election prevented the referring party from relying on new matters to bolster an adjudicator's jurisdiction

In Redworth Construction Limited v Brookdale Healthcare Limited (31 July 2006) Brookdale was the employer on a project for the construction of four group homes and a day care centre. It engaged Redworth as contractor for the project. The proceedings arose out of an adjudication decision delivered in April 2006 finding some £210,000 due to the contractor.

The employer contended that the adjudicator had no jurisdiction to decide the matter put before him because there was no contract in the JCT form as claimed by the contractor and/or the principal terms of contract were not recorded in writing so as to satisfy s.107 of HGCRA. The adjudicator had made a non-binding decision that there was a contract in the JCT 1998 form as maintained by the contractor.

On enforcement His Honour Judge Havery QC was asked to determine the following issues:-

(1) Whether the contract was in writing within the meaning of s.107

(2) Whether the contract included the JCT terms

(3) If the contract did include the JCT terms, whether s.107 of the Act applied

(4) Whether the responding party was a party to the contract

(5) Whether there was a dispute to refer to adjudication

What makes this case unusual, however, is the fact that on jurisdiction the contractor submitted a different argument to the Court than it had to the adjudicator.

In the adjudication the contractor had relied on a document dated April 2003 entitled "Draft Employer's Requirements" which stated the form of contract would be JCT 1998 with Contractor's Design coupled with a very important meeting on 21 November 2003. In the enforcement action, additional evidence was led on the existence of a revised Employer's Requirements and a Contractor's Proposal document dated December 2003. The contractor said that it had not relied on the additional documents in the adjudication as the sectional completion dates shown may have been damaging to its case.

The "contract in writing" issue was dealt with swiftly. Judge Havery found that a contract was made on 21 November 2003 but that the contract was not subject to the JCT terms. Crucially, a number of terms of the agreement reached in November 2003 were not in writing, in particular the price was not in writing and the documents relied on by the contractor showed no date of possession, contract period or completion date. These terms, according to the Judge were "manifestly relevant to the claim before the adjudicator". He therefore concluded that there was no contract in writing, applying RJT Consulting Engineers v DM Engineering.

In addition, Judge Havery held that the principle of election prevented the contractor from going beyond the matters that it had relied on in the adjudication. The contractor "cannot blow hot and cold, or approbate and reprobate its earlier argument... a party who has taken some benefit under an instrument such as... an order of the court cannot disavow that instrument so as to obtain a further benefit". The contractor had elected to put its argument in a particular way in order to obtain the benefit of the adjudicator's decision, both as to jurisdiction and substantively. According to the judge the contractor had therefore made an election from which it would not be just to allow it to resile (recoil), not least because it was impossible to determine what the adjudicator's decision would have been had the other matters been put to him.

A referring party must ensure that the contract relied on is both fully analysed and presented to an adjudicator. The judgment in Redworth demonstrates that over-simplifying such matters may prove to be a misjudgment.

Lawrence Davies is a Partner in the UK Construction and Engineering Group at law firm Pinsent Masons.