In an important decision, the UK Court of Appeal has today overturned a High Court judgment that restricted the use of a quicker and cheaper means of resolving construction disputes.
The decision in Abbey Healthcare (Mill Hill) Limited v Simply Construct (UK) LLP, in which Barry Hembling and Simon Jennings plus Sam Goodwill all from WFW’s construction team, acted for the successful appellant, will have significant implications for the construction and real estate industries as it confirms the benefits of adjudication as being widely available. It is also the first time that the Court of Appeal has considered the statutory meaning of a “construction contract” for adjudication purposes. Although the case concerned a collateral warranty, the principles could apply to other agreements such as third party rights schedules and forward funding agreements.
Adjudication is a fast track and less expensive procedure for resolving construction disputes than litigation and was introduced in the UK by the Housing Grants, Construction and Regeneration Act 1996 (the “Act”). In an adjudication, after submissions are made by the parties an appointed adjudicator makes a decision on the issue in dispute. Although that decision is only temporarily binding until, and if, the dispute is finally determined by court proceedings, arbitration, or settlement, in most cases the parties accept the adjudicator’s decision without further proceedings being necessary.