Jerram Falkus Construction Ltd v Fenice Investments Inc

Contractual conclusivity provisions may make an adjudicator’s decision conclusive where the contract gives the losing party a defined period to challenge it. The court should construe such provisions to give them practical effect and avoid redundancy.

The prevention principle applies only where the employer’s act or omission actually prevents completion by the contractual date. It is not engaged where the contractor would have been unable to complete by that date because of concurrent delay for which the contractor was responsible. A detailed contractual challenge to a final account may prevent it becoming conclusive, and need not be served only during a later withholding-notice period if the claim was already sufficiently particularised.

Jerram Falkus Construction Ltd was engaged by Fenice Investments Inc under an amended JCT Design and Build Form 2005 contract. The works were completed late, and Fenice claimed liquidated damages while Jerram Falkus claimed extensions of time and loss and expense.

After three adjudications, the adjudicator rejected Jerram Falkus’s prevention-principle arguments. The decision was not challenged within the contractual 28-day period. The parties then disputed whether that decision and the final account were conclusive, whether Fenice had prevented completion, whether alleged delays by British Gas and EDF were causative, and whether liquidated damages had been varied by agreement.

1. Third adjudication. The dispute raised before the court was the same dispute determined in the third adjudication. Clause 1.9.4 was intended to provide a final 28-day opportunity to challenge a post-final-account adjudication. If no challenge was made, the adjudicator’s decision became conclusive. Jerram Falkus could therefore no longer pursue the contention that time was at large or claim loss and expense arising from the alleged delay.
2. Final account. Fenice’s letter of 24 January 2011 was a clear and detailed challenge to the final account. It prevented the final account and final statement from becoming conclusive as to the disputed matters. The challenge was not invalid merely because it included Fenice’s own version of the account or was served before the five-day period associated with the payment provisions. The reasoning in Strathmore Building Services Ltd v Greig [2001] 17 Const LJ 72 concerned a different situation.
3. Prevention principle. Following Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111, the employer cannot insist on a completion date which its own act or omission has prevented the contractor from meeting. The principle requires actual delay to completion. The court adopted the analysis in Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm): where contractor-responsible delay was concurrent, the employer’s conduct had not prevented earlier completion and the principle was not triggered.
4. The factual delays were Jerram Falkus’s responsibility. The levels problem resulted from its design and build obligations. British Gas and EDF caused no critical delay; alternatively, any relevant delay was attributable to Jerram Falkus or concurrent with its own delay. The prevention claim therefore failed.
5. No binding or enforceable agreement varied the liquidated damages. On the evidence, any discount was conditional on house 4 being available as a show home by 5 June, which did not occur. The alleged agreement was also too uncertain as to the method of calculating the discount.
6. Fenice was entitled to liquidated damages of £209,840 gross, or £122,102.36 net after set-off. That sum was to be paid within 14 days. Approximately £43,000 of the final account remained disputed and open for resolution.

The judgment was a first-instance decision. It records three adjudications between the parties, including the third adjudication decision dated 28 October 2010, which was not challenged within the contractual period.