Breach of Natural Justice - CJP Builders v William Verry

August 2008

The recent case of CJP Builders v William Verry highlights the danger of amending standing forms and incorporating large numbers of documents into the contract.  The contract documents produced by William Verry purported to amend the standard terms of the DOM/2 subcontract conditions but the nature in which they tried to do so gave rise to a number of ambiguities in respect of the payment and adjudication provisions.

The problems came to light when CJP commenced an adjudication to obtain payment in respect of a monthly valuation which was outstanding and for which Verry had not served any withholding notice.  Verry requested an extension to the 7 days provided in the contract to serve its Response.  The adjudicator found that he had no discretion to extend time unless the parties so agreed.  The parties agreed that the Response would be served by 12pm on 14 May 2008.  In the event the Response was not served until around 6pm that day and the adjudicator decided that as it was late he could not consider the contents of it.  He then proceeded to make his decision based on the content of the Referral alone.

Verry attempted to argue that the adjudicator did have discretion under clause 38A of DOM/2 and could therefore allow the Response if so minded.  Verry also argued that CJP had commenced the adjudication under the wrong procedure as the contract in fact provided for adjudication under the TeSCA rules.

The adjudicator decided that CJP was entitled to the full amount claimed and following Verry's refusal to pay, CJP sought enforcement of the decision by summary judgement.  At the same time, Verry sought various declarations from the court on the interpretation of the contract and which provisions applied.

Mr Justice Akenhead carried out a detailed examination of the contract and held that the adjudicator did have the power to extend time under the contractual adjudication provisions.  He also held that there had been a significant breach of natural justice in denying Verry the opportunity to have its case heard.  The judgement contains a useful explanation of the considerations of the court when establishing whether there has been a breach of a natural justice.  CJP's claim for enforcement was therefore denied.

This case provides useful guidance on the scope of an adjudicator's powers and in particular his power to extend the periods for the service of documents, a constant source of contention between parties during adjudication proceedings.  It also underpins a fundamental principle of adjudication - a party's right to be heard.  As Mr Justice Akenhead said "Very clear wording would be required to ensure that such a right was denied."

The full transcript of the case can be found here.

This article contains information on current legal issues but is for information purposes only.  It should not be relied upon or be construed as advice or applied to any particular set of facts.  If you have a particular issue please take professional advice.