Those in the Construction industry may be aware that The Joint Contracts Tribunal (JCT) launched its 2016 edition of the Minor Works suite of contracts on 15 June 2016. The Minor Works contract is often used for lower value commercial and residential projects as it is relatively succinct but provides a level of clarity and protection for both parties.
Amongst the recent amendments to payment provisions, termination and insurance clauses hide something seemingly innocuous but potentially critical if a dispute arises. Clause 7.1 now states, “Subject to Article 6, [Adjudication] if a dispute or difference arises under this Contract which cannot be resolved by direct negotiations, each Party shall give serious consideration to any request by the other to refer the matter to mediation”. This wording clearly does not bind or force the parties into mediation but, in light of the way the courts are approaching Alternative Dispute Resolution, it is likely to give a Judge the opportunity to be even more critical of a party that fails to accept an invitation to mediate.
Courts have historically been keen to encourage parties to a lower value building dispute into mediation and in Burchell v Bullard and others  EWCA Civ 358, a small building case, Ward LJ in the Court of Appeal said: “…a small building dispute is par excellence the kind of dispute which… lends itself to ADR”. To refuse mediation because “the matter was too complex for mediation” was “plain nonsense”. To ignore such robust terminology from the bench would be risky as courts have a wide discretion when it comes to the question of costs. A party may find itself on the winning side at trial but, if it unreasonably refused mediation, it may end up not recovering its own costs or – even worse – paying a proportion of the unsuccessful party’s costs.
For further information, please contact Jan Rzedzian, Construction Lawyer at Hay & Kilner
Call: 0191 232 8345