The Contract
The parties’ relationship was governed a JCT D&B 2011 (as amended) (“the Contract”) for the design and build of the shell and core of a new house on Clabon Mews, London SW1. The contract sum was £2,587,250, later increased to £3,130,02.
The dispute concerned the sum of £483,512.12 which the Contractor said was owed to them by Mr Mincione pursuant to (i) a Final Statement served in accordance with clause 1.8 and 4.12 of the Contract; and (ii) an adjudication decision (“the Decision”) determining the same.
Clause 4.12.6 of the Contract provided that:
"Except to the extent that prior to the due date for the final payment the Employer gives notice to the Contractor disputing anything in the Final Statement or the Contractor gives notice to the Employer disputing anything in the Employer's Final Statement, and subject to clause 1.8.2, the relevant statement shall upon the due date become conclusive as to the sum due under clause 4.12.2 and have the further effects stated in clause 1.8."
The due date for the Final Statement is provided for under clause 4.12.5 as one month after the last of either the end of the Rectification Period; the date in the Notice of Completion of Making Good; or the date of submission of the Final Statement.
The TCC Decision
On the facts, the Court found (as did the Adjudicator) that the due date was 4 January 2021, being one month after service of the Final Statement.
Next the Court considered the conclusivity of the Final Statement. The Court examined clause 1.8.1 of the Contract which provides that the Final Statement will become conclusive evidence of any claims for EOTs / loss and expense unless the relevant party gives notice disputing the Final Statement in accordance with clause 4.12.6. Importantly, clause 4.12.6 states that it is subject to clause 1.8.2.
It is the Court’s analysis of the words “and subject to clause 1.8.2” which proves to be an interesting read. Clause 1.8.2 provides that if adjudication, arbitration or other proceedings are commenced before the due date, the Final Statement will not become conclusive until e.g. the conclusion of those proceedings (clause 1.8.2.1).
The Contractor argued that in order to avoid the Final Statement from becoming exclusive evidence of the sums due pursuant to 1.8.1, clause 4.12.6 required the Employer to:
- Issue a notice disputing the Final Statement; and
- Commence an adjudication or other proceedings before the due date.
However, the Court found that the words "and subject to clause 1.8.2" have the opposite effect to that contended for by the Contractor. The Judge said that the words
“do not provide for two steps each of which must be taken in order to prevent the Final Statement becoming conclusive. Instead, they provide alternative routes to the same result and make it clear that if proceedings have been started before the due date then the Final Statement does not become conclusive even if no notice of dispute has been given.”
Implications
This decision makes it clear that in order to avoid the Final Statement becoming conclusive evidence of the sums due, the relevant party must, before the due date, either give notice disputing the Final Statement or issue formal dispute proceedings in accordance with the contract.
