I have to start this edition’s column with an apology.

In edition 48 (May 2002), I criticised the decision of HH Judge Bowsher in Grovedeck Ltd -v- Capital Demolition Ltd. You may recall that this decision involved the transubstantiation of a contract which is not in writing but, by virtue of the other party not challenging the commencing of an adjudication, becomes a contract in writing; and the judgement was that the ‘pleadings’ had to be in a previous adjudication. Many other commentators had taken the same view as I did – believing that Parliament had intended to bring as many contracts as possible within the definition of a ‘contract in writing’, and this judgement appeared to counter this intention.

I had one of those ‘Paul on the road to Damascus’ revelations (without the blindness) and realised that Judge Bowsher was right but, with respect, not for the reasons set out in his judgement.

I had compared Judge Bowsher’s decision above with s.5(1) of the Arbitration Act, which is in near identical wording – substituting ‘arbitration agreement’ for 'contract'. The revelation was the realisation that this transubstantiation would affect not only the adjudication provisions but also the provisions for payment. (The provision in the Arbitration Act applies only to the arbitration agreement.) An adjudication could be held following completion of the work and could introduce not only the ‘interim payments’ provisions but also the bar on ‘pay when paid’ and the right to suspend work. It is fundamental to English Law that legislation cannot have retrospective effect

I had always allied the provisions with a form of estoppel and, if the Construction Act could be read in that way, the provision could be preserved, only affecting the adjudication. I think that this reading would put somewhat of a strain on the English language but the wording is yet another example of the inept drafting of the Construction Act.

While re-examining my previous comments on cases related to s.107 of the Construction Act, I have also looked at the Court of Appeal case of RJT Consulting Engineers Ltd -v- DM Engineering (Northern Ireland) Ltd.

You may recall that this case addressed the transubstantiation from oral to written contract when the agreement is ‘evidenced in writing’. Most early commentators seemed to agree that this provision would take effect following only a brief reference in writing, perhaps only sufficient to demonstrate that a contract had been concluded, leaving determination of the terms to the adjudicator. While this was the line taken by the court at first instance, the Court of Appeal found that certainty was essential and the whole of the agreement had to be in writing. Many commentators (myself included) had preferred the minority judgement of Auld LJ who had confined the need for agreement to the issue(s) giving rise to the dispute. On reflection, this view must be wrong as a further dispute on different issues would be caught by the ‘construction contract in writing’ but without necessarily any relevant agreement being in writing. Once we accept that some defined terms must be in writing then the Court of Appeal judgement is sustainable. However, I continue to maintain that the judgement runs contrary to the generally perceived view of the intention of Parliament.

At the meeting on 18 February, I made a remark about whether the wording of the Arbitration Act (AA) would have differed if it had been drafted after the Civil Procedure Rules (CPR) came into effect. While this remark appeared to be flippant, it has a very serious basis – whether one can take account of subsequent legislation when trying to determine the meaning of an Act. While there is no constructional rule which permits this process, there are examples of its use in reverse – that Parliament had not taken the opportunity to include matters which were in a pre-existing Act, therefore there was no intention that such matters should be included. (The example which comes to mind is that, although given several opportunities, Parliament has always declined to allow the award of interest on claims which had been paid before commencement of litigation / arbitration.)

Taking as an example one matter which was raised at that meeting, does an arbitrator have power to vary his award of costs following a ‘Claimant’s offer’ (AKA, to those of a litigious persuasion, a Claimant’s part 36 offer) in a similar way to CPR rule 36.21? As the power under the AA is largely unfettered and CPR post-dates AA then I see no reason why the arbitrator cannot ‘borrow’ from CPR. However, If CPR had pre-dated AA then I suggest that we would have to say that Parliament, with the knowledge of CPR, had declined specifically to give this power and it therefore cannot be assumed. Try this approach on other legislation.