| Date | 4 October 2000 |
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| Judgment | John Mowlem & Co Plc -v- Hydra-Tight Limited TCC 6 June 2000 |
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| The Issue | Whether the ICE "matter of dissatisfaction" procedure contravenes the requirements of the HGCR Act 1996. |
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| Implication |
The requirement to obtain an engineer's decision before a matter may be referred to adjudication is not compliant with the Act. |
printThe Institution of Civil Engineers has a vested interest in preserving the professional functions of the engineer. This is clearly reflected in the drafting of many of its standard forms and became particularly obvious in the ICE's response to the HGCR Act. he approach of the standard form agreements published by the ICE to the resolving of disputes prior to the Act was that disputes or differences should in all cases be referred first to the engineer named in the contract for a decision under clause 66. The ICE was not ready to displace this system which had worked effectively for many years. Accordingly an arrangement was contrived whereby disputes or differences would not become disputes for the purposes of the Act unless and until they had been referred to the engineer for a decision, or the appropriate time for such a decision had elapsed. Prior to that point disputes or differences were now to be called "matters of dissatisfaction". T he stated rationale behind this approach is to be found at clause 66 (1) of the ICE's seventh edition form of contract. "In order to overcome where possible the causes of disputes and in those cases where disputes are likely still to arise to facilitate their clear definition and early resolution (whether by agreement or otherwise)……" This is of course perfectly sound reasoning and few would disagree that the engineer's decision has proved to be an effective procedure. Although under these arrangements the engineer's decision may delay the point at which an adjudication may effectively commence by up to four weeks, such a delay is unlikely to disadvantage either party. Moreover the engineer will normally be better informed with regard to the "matters of dissatisfaction" than would any other third party. The engineer's decision will therefore represent an invaluable statement of the engineer's position in respect of the matters in dispute. To fix that position formally is often crucial since the disputed matters frequently concern actions of the engineer, including the quality of design information, the giving of instructions or the certification of time and money. It is of course this last factor that has generated much criticism, it being observed by some commentators that a truly independent decision is all too often unobtainable in such circumstances. It is for this reason that certain standard forms, such as the New Engineering Contract, had sought to separate the functions of engineer and dispute resolver even before the advent of the Construction Act. From the outset many observers felt however that the ICE's "matter of dissatisfaction" approach jarred with the requirements of the Act. Section 108 (1) provides that "a party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section". For this purpose "dispute" includes any difference. Section 108 (2) states that a contract shall: (a) enable a party to give notice at any time of his intention to refer a dispute to adjudication (b) provide a timetable with the object of securing the appointment of the adjudicator and referral of the dispute to him within seven days of such notice. It is therefore argued that the "matter of dissatisfaction" clauses are illegal since they deny a party an immediate right to refer a dispute to adjudication at any time, and to obtain the appointment of an adjudicator within seven days. These matters were considered in the recent case of John Mowlem & Company -v- Hydra-Tight Limited. Hydra-Tight had been engaged by Mowlem to undertake work on the London Underground under a New Engineering Contract option A form of agreement. The contract included the amendment Y (UK) 2 published by the ICE aimed at complying with the HGCR Act. In similar fashion to the ICE contracts, option Y (UK) 2 provides at Clause 90.4 "the parties agree that no matter shall be a dispute unless a notice of dissatisfaction has been given and the matter has not been resolved within four weeks. The word dispute (which includes a difference) has that meaning". Whether these provisions offended the Act was not put before the Court since the parties agreed that the provisions were illegal. However Judge Toulmin commented that he accepted the argument that clause Y (UK) 2 did not provide a timetable for the securing of the appointment of an adjudicator and referral of a dispute to him within seven days. Accordingly on the plain wording of the statute, the Scheme for Construction Contracts would apply. The Institution of Civil Engineers may have to look again at the arrangements they have adopted. Under section 108 (5) of the Act if any part of the contract adjudication provisions is found to contravene the requirements of the Act, the entirety of the adjudication provisions of the Scheme will apply. It is unlikely that this will find favour with the ICE, since it immediately side-lines the engineer as the dispute resolver of first recourse.
CJ-0039
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