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South of the border, Mr Justice Edwards-Stuart in Anglian Water Services v Laing O'Rourke Utilities has provided useful guidance on what amounts to effective communication under the NEC standard form and has set out the Court's views on the NEC's use of the present tense. 

The Facts

In early 2004 Anglian Water Services ("AWS") and Laing O'Rourke Utilities ("LOR") entered into a contract for the construction of a new waste water treatment works in Saltfleet, Lincolnshire on an amended NEC2 standard form.  16 months after practical completion one of the pre-stressed concrete tanks constructed on the site suffered a catastrophic failure and collapsed. 

Liability for the collapse was disputed and, in late 2009, the parties agreed Dr Gaitskell QC to act as adjudicator.  He concluded that LOR's liability was nil.  AWS being dissatisfied with the decision instructed their solicitors to give notice of their intention to refer the dispute to arbitration under clause 93.1.

Problems arose when AWS's solicitors did not serve the notice on the address identified in the contract, serving it instead on LOR's solicitors.  Once the four week time limit for giving a notice to refer under clause 93.1 had expired, LOR argued that its solicitors had authority only to receive documents relevant to the adjudication – a notice of intention to refer a dispute to arbitration was not, LOR said, such a document.  Accordingly, they said, the notice to refer was ineffective and the adjudicator's decision permanently binding and could not be challenged by arbitration.

AWS applied under the Arbitration Act 1996 for a declaration that its notice of intention to refer the dispute to arbitration had been served in time, and for an extension to the date for service if required.

The decision

Mr Justice Edwards-Stuart had some sympathy for AWS and their solicitors.  LOR's solicitors had authority to accept service of documents relevant to the adjudication.  Although the Judge accepted it was a "matter of impression", he ultimately concluded that a notice of intention to refer under clause 93.1 was a document relevant to the adjudication.  The notice to refer was therefore effective from the date it was received by LOR's solicitors. 

More interesting perhaps than the outcome was the approach taken by the Judge in interpreting clause 13.2 – which states, "A communication has effect when it is received at the last address notified".  LOR had accepted that the notice to refer was passed on to the relevant persons at LOR dealing with the dispute within the four week time limit.  AWS argued that the notice had therefore been effectively communicated – clause 13.2 was to be construed widely so as not to preclude the giving of the notice by other means.

As the Judge observed, such an argument is attractive.  Where a communication has reached the intended recipient, perhaps by more expeditious means, then no prejudice is apparently suffered by either party.  To prevent contractual communications at site meetings, for example, where documents are often exchanged at a commercial level would simply be adding to the administrative burden on the parties.

Timing is however crucial under the NEC form.  Clause 13.2 fixes the moment in time when a communication takes effect, the date of which may then trigger the start of the period in which a response or further action is required.  The Judge found that by clause 13.2 the parties had intended to provide a single address for receipt of all communications and which through all documents were to be channelled.  Thus it was no defence to say that the notice was actually received by other means.

Conclusion

This decision confirms that under the NEC form of contract the requirement for communications to be received at the last address notified is prescriptive, in that a communication only has effect when received by the other party at the last address notified.  Care must therefore be taken in identifying the correct address for service.

Applying the logic of the Judge's decision, clause 13.7 requiring "a notification which this contract requires separately from other communications" is also likely to have to be strictly adhered to for effective communication.

Bringing matters full circle, notifying an address for service has, to be effective, to be done separately and sent to the right address.

Finally, it is interesting to note the Judge's comments in construing clause 93.1 of the NEC:

"I have to confess that the task of construing the provisions in this form of contract is not made any easier by the widespread use of the present tense in its operative provisions.  No doubt this approach to drafting has its adherents within the industry but, speaking for myself and from the point of view of a lawyer, it seems to me to represent a triumph of form over substance."

No doubt many who advise clients on the parties' obligations under the NEC and who litigate and adjudicate based on the NEC conditions share this view.  But that is a different debate. 

By Andrew Shelling, Solicitor,

Winner British Legal Awards 2010-11 – Law Firm Innovation

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