Submissions
10 The plaintiff's claim is based on the propositions, first, that the Notice of Dispute constitutes a reference to a Dispute Committee under clause 25.2 of the contract, and, secondly, that such a reference of a dispute to a Dispute Committee constitutes the commencement by the plaintiff of "other dispute resolution proceedings" pursuant to s.25(2) of the Act. Mr Margetts submitted that the Act is not intended to displace the rights of parties under a contract, inter alia, to resolve disputes under specific provisions of the contract between them. He submitted that the purpose of the Act is to ensure either the payment of progress claims, or the setting aside of security for them, as determined by the adjudicator under the Act. Thus, he submitted, the structure of s.25 is such that, if a respondent to a statutory adjudication seeks to resort to the dispute resolution provisions of a contract, and provides appropriate security for payment of the amount found due by the statutory adjudication, that security could not be enforced until the final determination of the contractual dispute resolution processes. Mr Margetts further submitted that the phrase "or other dispute resolution proceedings" in s.25(2) of the Act should be given a broad construction. The Act must be construed in the setting of the practices of the building industry. The existence of "prior reference" provisions such as clause 25.2 of the contract are common in building contracts.[1] Mr Margetts submitted that a Dispute Committee constitutes a mechanism, separate from the parties, which, under clause 25.2, is empowered to make a decision which is "final and binding" upon the parties. The parties are not entitled to proceed to adjudication (under clause 25.3) or arbitration (under clause 25.6) unless and until the dispute has first been considered by the Dispute Committee. Thus Mr Margetts submitted that the processes of a Dispute Committee are "other dispute resolution proceedings" under s.25(2) of the Act.
11 In response, Mr Robins' primary submission was that the phrase "other dispute resolution proceedings" in s.25(2) of the Act connotes curial or quasi-curial proceedings. Mr Robins submitted that the Dispute Committee is a conciliatory body lacking curial or quasi-curial processes. Mr Robins also submitted that, if the processes of a Dispute Committee could be characterised as "other dispute resolution proceedings", the notice of dispute served on 31 October did not constitute the commencement of such proceedings in any event. In support of that argument he relied on the lack of any identification, in the notice of the dispute, of which "tier" of dispute resolution under clause 25 of the contract was being invoked by the plaintiff. Mr Robins also submitted that because the notice was expressed to be "without prejudice" to the rights of the Contractor under the contract, notice of dispute could not operate as a commencement of any proceedings under clause 25.2 of the contract.
12 There are thus two questions which I must determine. The first question is whether the notice of dispute dated 31 October 2006 constituted a reference by the plaintiff of the dispute to the Dispute Committee. The second question is, if it did, was such a reference of the dispute to the Dispute Committee constitute the commencement by the plaintiff of "other dispute resolution proceedings" under s.25(2) of the Act.
The Notice of Dispute
13 Turning to the first question, the notice of dispute itself does not, on its face, identify what process of dispute resolution was intended to be invoked by the plaintiff. However, the letter which accompanied the dispute notice made it plain that the plaintiff intended to invoke the procedures of the Dispute Committee and requested the defendant to confirm the names of its authorised representatives. The dispute notice itself, both in its title, and in clause 2, indicated that the plaintiff was intending to invoke the processes of clause 25 of the general conditions of the contract. Under clause 25, the parties could not proceed to adjudication or to arbitration unless they first referred the dispute to a Dispute Committee. In those circumstances, I accept that the notice of dispute intended to, and did, refer the relevant dispute to a Dispute Committee under clause 25 of the contract.
14 The concluding sentence of the notice, that the notice is "without prejudice to" the rights of the contractor under the contract and at law, is curious. Its intended meaning is difficult to divine. Possibly, it meant that service of the Notice was not intended to derogate from any other rights of the Contractor. If that is correct, then such a reservation of rights did not prevent the Notice being effective under clause 25.2. Alternatively, the "without prejudice" notation might have been intended, somehow, to perform the same function as it does to cloak negotiations, antecedent to or in the course of litigation, with legal privilege. If that is so, then the inclusion of that phrase on the foot of the Notice of Dispute was misconceived and thus of no effect. Whatever the "without prejudice" phrase means, it does not, in my view, negate the effect of the letter accompanying the notice, together with the references in the notice to clause 25 of the conditions of the contract, as constituting the notice an efficacious reference of the dispute to a Dispute Committee under clause 25 of the general conditions of the contract.
"Other Dispute Resolution Proceedings" - s.25(2) of the Act
15 The second question is whether the reference of the dispute to the Dispute Committee, under clause 25.2, constitutes the commencement of "other dispute resolution proceedings" by the plaintiff under s.25(2) of the Act. In support of the submission that the notice of dispute constituted the commencement of such proceedings, Mr Margetts relied on two principal features of clause 25.2 of the contract. First, he pointed out that it was mandatory for the parties to refer a dispute to the Dispute Committee, before they are entitled to obtain an adjudication (under clause 25.3) or to proceed to arbitration (under clause 25.6). Essentially, Mr Margetts submitted that clause 25.2 is the gateway to "other dispute resolution proceedings" provided for in the contract. Secondly, Mr Margetts relied on the last sentence of clause 25.2, which provides that any "mutual decision confirmed by the dispute committee" in respect of a dispute "shall be considered final and binding upon the parties". Mr Margetts submitted that those two characteristics of the Dispute Committee lead to the conclusion that the reference of a dispute to the Dispute Committee constituted the commencement of "other dispute resolution proceedings" under s.25(2) of the Act.
16 In determining this question, three preliminary observations may be made. They are each obvious but they are worth stating. First, as the parties have correctly pointed out, the Act did not intend to supplant contractual provisions for the resolution of disputes between parties. That is made plain by s.18(6) and s.47 of the Act. Accordingly, s.25(2) recognises that, notwithstanding the conclusion of an adjudication under Part 3, Division 2 of the Act (to which I shall refer as a "statutory adjudication") the parties may resolve a dispute which has already been subject to an adjudication, by the commencement of proceedings, including "arbitration proceedings or other dispute resolution proceedings".
17 Secondly, the intention of the Act is to provide a process for the speedy and efficient making and determination of progress claims. That process is designed to serve the express purpose of the Act, namely, to protect the entitlement of a contractor to recover progress payments. (Section 3(1)). In order to achieve that objective, the Act expressly provides that its intention is to ensure the payment, or setting aside of money as security for payment, of amounts determined by a statutory adjudication.[2]
18 Thirdly, and consistent with those objectives, s.25(2) only allows a respondent to a progress claim to withhold payment of an adjudicated amount, and instead to give security for payment of that amount, where the respondent has commenced "proceedings" in relation to a dispute under the contract. The existence of a dispute, and even the articulation of that dispute between the parties, would not be sufficient to entitle a respondent to defer payment and to provide security in lieu. Section 25(2) expressly requires that the respondent must have commenced "proceedings" in order to be entitled to defer payment and to provide security instead.
19 Thus the principal issue in this case concerns the construction of the phrase "other dispute resolution proceedings" in s.25(2). As a starting point, it is of course relevant that the sub-section uses the noun "proceedings", and not some other noun such as "processes". The phrase "other dispute resolution proceedings" is used in the context of the requirement that the respondent has commenced "proceedings (including arbitration proceedings or other dispute resolution proceedings)". Ordinary canons of statutory construction, and the context, favour the construction of the phrase "other dispute resolution proceedings" eiusdem generis. In other words, orthodox principles of interpretation favour the conclusion that "other dispute resolution proceedings" consist of processes of a similar nature to arbitration proceedings. In ordinary usage, the terms "proceedings" and "arbitration proceedings" contemplate curial, or quasi-curial, processes involving the independent adjudication or determination of a dispute between two or more parties. While the phrase "other dispute resolution proceedings" is no doubt intended to encompass a broader category of proceedings than arbitration proceedings, nonetheless the context of that phrase, in my view, clearly envisages that such other dispute resolution proceedings shall involve the independent determination or adjudication of the relevant dispute between the parties.
20 Indeed, it is clear that the Act specifically contemplates that the processes involved in "other dispute resolution proceedings" conclude in a "determination" of those proceedings. Section 25(5) and (6), which I have set out above, are each premised on the conclusion of such proceedings with a "determination". So too does s.47(4) of the Act which provides: