Contracts for construction operations
By Victoria Russell, Fenwick Elliott
Husband and Brown Ltd v Mitch Developments Ltd  EWHC 2900 (TCC) (16 October 2015)
In this case, Husband and Brown claimed an outstanding fee due under an oral agreement made between them and the Defendant. The Defendant was engaged in commercial property development and intended to purchase a site in order to construct a care home to be operated by its operational arm. The Defendant identified a suitable site. Husband and Brown was engaged in the business of land acquisition planning and development and was able to achieve a significant saving for the Defendant on the purchase price. A dispute arose over the incentive fee which was payable.
The Defendant sought a declaration that the adjudicator had had no jurisdiction to make his decision.
One of the heads of claim was for adjudication costs, which the Claimant said was a foreseeable and recoverable consequence of the breach by the Defendant.
For a contract to be covered by the adjudication provisions of the Housing Grants, Construction and Regeneration Act 1996, it must be an agreement to carry out construction operations or to arrange for the carrying out of construction operations.
The Defendant submitted that this was not a construction contract under the Act and the dispute should therefore not have been referred to adjudication. Counsel for the Defendant submitted that the agreement between the parties involved negotiation of a price for land and negotiations subject to contract but did not involve anything to do with building or works on the land.
The Judge said:
“In my view the Defendant is correct in its interpretation that this was not a construction contract within the meaning of the Act. It was not an agreement to carry out construction operations or to arrange for the carrying out of construction operations……
In this case the matter did not fall within the scope of the Act and in my view this means that it was not reasonably foreseeable that the costs of adjudication would result. Even if I am wrong on this, to allow the Claimant to recover its costs of adjudication would subvert the statutory scheme which does not allow for such costs. The costs of the adjudicator and the associated legal fees are not therefore recoverable”.