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Opinion
PUZZLE FOR ARBITRATORS
Mr Brown had an extension built onto his house. He was dissatisfied with the work and withheld money (so far quite familiar). The contract was quite basic (produced by the contractor) but included an arbitration clause. (for those unfamiliar with construction, the 'Construction Act', including adjudication, does not apply). The payment terms of the contract were that 100% would be paid on completion (75% having been paid at the mid point of the construction period) or occupancy by the owner, whichever was the earlier and that the Contractor would return to remedy any defective work during the next 12 months. Interest on late payments was at the rate of 4% per annum.
Following the non-payment, the Contractor commenced arbitration. His case was that, whatever the 'defects', he was entitled to payment of 100% of the contract sum when the owner took occupancy. He also claimed that, as the interest rate was inadequate - it was less than 'Bank Rate', he should be awarded interest in accordance with the Late Payment of Commercial Debts (Interest) Act.
Rather than coming to a conclusion, I invite all members to consider the several matters which could come for decision, whether they would properly be raised by the arbitrator and whether your approach would be different where both parties are represented (by lawyers or 'claims consultants'), only one party represented and neither party represented.
Peter Horne