In the last edition of our monthly newsletter we reported on the case of Jerram Falkus Construction v Fenice Investments which concerned the recoverability of an adjudicator’s fees.
The Judgment in Fenice Investments v Jerram Falkus Construction concerns various other issues arising between the parties. Of particular note are the Court’s findings in relation to conclusivity and also the prevention principle.
As a reminder, JFC was the contractor engaged by Fenice. Completion was delayed and a dispute arose as to the cause of the delay and the financial position under the contract.
Conclusivity
Of the 3 adjudications between the parties (which the judge described as “promiscuous”!) one dealt with the contractual completion date and JFC’s entitlement to loss and expense. The adjudicator found in Fenice’s favour. A question arose as to whether the adjudicator’s decision had become “conclusive” under the contract.
The contract provided that where an adjudicator issues a decision after the Final Account and Final Statement have been submitted, then if a party wanted the dispute to be finally determined by legal proceedings or arbitration, it may commence such proceedings within 28 days of the decision.
The Court held that although the word “may” was permissive rather than mandatory, in the context of the contractual provisions as a whole it was intended to provide conclusivity so as to prevent further disputes; if its purpose was not to provide a deadline for commencing legal proceedings then the provision would be redundant and would make no commercial sense.
In the circumstances, the adjudicator’s decision had become conclusive and could not be challenged by JFC.
Prevention Principle
One of JFC’s arguments was that Fenice’s actions had prevented it from completing the works by the completion date and it should therefore be entitled to an extension of time and should not have LADs levied against it.
The Court confirmed that the prevention principle does not apply if there is a concurrent delay of the contractor’s own making which prevents it from completing the works by the completion date.
On the facts, the Court held that there had been no prevention by Fenice, and that even if there had, there had been a concurrent delay caused by JF itself. On that basis, JFC had no entitlement to an extension of time.
Therefore, in cases of concurrent delay, the contractor would have to prove actual delay by the employer beyond its own delay in order for the prevention principle to apply.
COMMENT: Parties should check the terms of their contracts carefully so as to understand the circumstances in which e.g. adjudicator’s decisions or certificates of payment become conclusive or they may otherwise lose the right to challenge them in subsequent legal proceedings. The Judgment is also helpful in clarifying the circumstances in which a contractor can rely on employer prevention in support of an extension of time and/or claim for loss and expense, though in all cases the relevant contract mechanism must be applied.
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