Pulling a fast one

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Tony Bingham A court in Scotland was asked to give summary judgment against a builder. The judge refused because he said it was too soon to make a binding decision. What would the adjudicator have done?

It sounds like an idyllic spot for Mr and Mrs Firth to build their retirement dream home: Blinkbonnie, Rockliffe, Scotland. They entered into a contract with Blinkbonnie Developments for the construction. Interestingly, a parallel contract was arranged whereby the director of the builder, Gary Davidson, guaranteed all the promises of his limited liability company. The house was completed and the retired couple moved in.

Oh dear. They soon discovered defects. It was said that a key structural beam was omitted, the bedroom floor dipped and so did the lounge ceiling. The roof structure then attracted attention, then the staircase, then defective substructure and distortion of the timber frame. Mr and Mrs Firth moved out. Then they sold up. The sale price was knocked down to 拢240,000. The alleged defects had, the Firths claimed, reduced the proper sale price to that from 拢360,000. The Firths are now back in Dorset, and they are seeking compensation from the building company or its director in person.

The formal claim from Mr and Mrs Firth鈥檚 lawyers says there was an implied promise in the contract by the builder that the house would be built to a reasonable workmanlike standard, free from such defects as would render it unsafe of unsuitable for occupation as a domestic building. The builder鈥檚 lawyers accepted that there was a duty to build to the standard of care and workmanship of a builder engaged in building a house. And they claimed this was what had been done.

The Firth鈥檚 team considered that the builder had no chance of succeeding on that defence if it went to trial, so they came for what is known as summary decree or summary judgment. They requested a declaration that the builder was liable. As for the amount to be paid, that could be negotiated or come to trial on quantum only. The Scottish judge considered the application for quick decision on liability being a 鈥渢here and then鈥� process.

It strikes me that a dispute like this, which comes for a high-speed decision in court, has similarities with high-speed adjudication, meaning the Construction Act 28-day dispute programme. If not precisely the same as litigation, it is a form of 鈥渟ummary proceedings鈥� similar to what the judge was being asked to do in this building case. So, let鈥檚 look at how this experienced judge approached high-speed decision-making.

Credit: Simone Lia

"Either I鈥檓 getting taller or we have a problem with the ceiling"

Remember, there were about three defect items: that is, the structural floor beam, the staircase and the substructure. It first strikes me that the judge was concerned that since the litigation was only begun in September last, and since the defence team had instructed an expert report in December, which was awaited, and since it was now only February, it was all too soon for reaching a court decision on liability. Contrast that with Construction Act adjudication. It has to move much faster.

These parties could not ordinarily use Construction Act adjudication because parliament decided that a dwelling intended to be lived in by a party to the contract is outside the act. But let me give you a general tip. In a dispute about defects, don鈥檛 leave it until the last minute to get an expert report. And you should certainly not leave it until an adjudication commences. That鈥檚 But what is to be done in an adjudication when a last-minute report is produced that begs for a reply, but time is running out and the parties are entitled to say no to extending it? In litigation, in summary proceedings, the court would refuse to make a decision; but what鈥檚 the score in adjudication?

The judge saw that in the Firth and Blinkbonnie case the positions were still being developed. What was on the cards is that just because the building contained serious defects, that does not automatically mean that what the builder did was below the standard of care and workmanship of an ordinary builder building a house. It was too soon to make a binding decision about the extent of the builder鈥檚 promises. No summary judgment could be made.

So, that was too fast for litigation, can a dispute, which has crystallised but is still developing by evidence, by expert reports, by legal argument, also be too fast for 28-day adjudication? Perhaps the answer is available in what I call 鈥渟uccessive adjudication鈥�. The adjudicator decides the first adjudication on the materials fairly before him. But if a new, better case becomes available months later, can that be adjudicated and trump the first? It鈥檚 a developing notion. Silly? Let鈥檚 see.