The Winter of Discontent: NEC notice of dissatisfaction

In a steady stream of cases where parties have fallen foul of the NEC’s requirements for notices of dissatisfaction, here is another: Ravestein B.V. -v- Trant Engineering Limited [2023] EWHC 11 (TCC)

A brief look back on some of those recent cases:

• In Transport for Greater Manchester v Keir Construction [2021] EWHC 804 (TCC), there was the problem of where to serve the notice. It was served by one solicitor on the other solicitor.
  
  Luckily for Transport for Greater Manchester, that was accepted as good service by the court, based upon the parties’ solicitors’ exchange of contact details during the earlier adjudication.
  
  The content of the notice was also disputed in that case …. more on that to follow.

• In Prater Limited v John Sisk & Son (Holdings) Limited [2021] EWHC 1113 (TCC), John Sisk & Son challenged the adjudicator’s jurisdiction in the fourth adjudication because the adjudicator’s decision relied upon two previous decisions which were the subject of notices of dissatisfaction.
  
  That argument failed because the earlier decisions were found to be binding on the parties until revised by the tribunal deciding the challenge.

• In The Metropolitan Borough Council of Sefton v Allenbuild Ltd [2022] EWHC 1443 (TCC), the issue was whether it was sufficient for the notice to say that the dissatisfaction related to "the entirety of the Adjudicator's Decision including all of the Adjudicator's conclusions, reasoning, and decisions" and not to distinguish between a challenge on jurisdictional grounds or a challenge to its substantive merits.
  
  Whilst details of any substantive challenge do not need to be included in a notice, the notice must make clear the basis of challenge. In that case, the notice had failed to do so.
  
  What also did not help was the fact that the contractor had not raised objections on jurisdictional grounds or reserved its right to do so at the appropriate time.

And in this latest case?

Ravestein had been appointed to carry out works for Trant. Their contract was an amended NEC3 subcontract which included Dispute Resolution Option W2 (the option for use on UK projects where the Construction Act 1996 applies).

Trant referred a dispute to adjudication, alleging that Ravestein’s works were defective and sought damages as a result. Ravestein did not, for the most part, take an active role in the adjudication. The Adjudicator issued his decision on 11 April 2021, awarding Trant damages for nearly half a million pounds plus VAT and costs.

The very next day, a series of emails were exchanged between Mr Ravestein and the adjudicator, copied to Trant and the parties’ legal representatives, in which Mr Ravestein contested the adjudicator’s jurisdiction on the ground that Ravestein hadn’t received the referral notice within 7 days.

The following email was relied on, by Ravestein, as the notice of dissatisfaction under clause W2.4(2) of the subcontract.

"Mister Cousins,

After seven days you weren't entitled to make any rulings. You must also follow the rules of the UK in 1996 by the Housing Grants, Construction and Regeneration Act (Construction Act).

If you do not withdraw your ruling before tomorrow, our solicitor mister Hugh Smit will file request at ICE to reverse the ruling.

All rights reserved.

Kind regards"

Fast forward to 27 October 2021, when Ravestein referred the dispute to arbitration. The first question to be answered: Had Ravestein complied with clause W2.4(2) of the Contract?

Quick reminder of what NEC3’s clause W2.4(2) says:

"(2) If, after the Adjudicator notifies his decision a Party is dissatisfied, that Party may notify the other Party of the matter which he disputes and state that he intends to refer it to the tribunal. The dispute may not be referred to the tribunal unless this notification is given within four weeks of the notification of the Adjudicator's decision."

The arbitrator found that Ravestein had not served a valid notice of dissatisfaction as the notice only referred to a jurisdictional challenge and not a challenge as to the correctness of the decision itself.

Ravestein sought leave to appeal the arbitrator's decision pursuant to section 69 of the Arbitration Act 1996, on the grounds, among other things, that the decision of the arbitrator was obviously wrong because the arbitrator incorrectly held that to comply with clause W2.4(2), the notice of dissatisfaction had to both notify the matter in dispute and state the intention to refer it to the tribunal.

Ravestein relied on the judgment of O’Farrell J in Transport for Greater Manchester v Keir Construction Ltd mentioned earlier, in particular paragraph 43, which said:

“43. The Contract did not stipulate the form of words that had to be used, or the level of detail that was required in any notice of dissatisfaction. The purpose of the notice was to inform the other party within a specified, limited period of time that the adjudication decision was not accepted as final and binding. A valid notice would have to be clear and unambiguous so as to put the other party on notice that the decision was disputed but did not have to condescend to detail to explain or set out the grounds on which it was disputed."

Ravestein’s argument:

• the only requirement of a notice of dissatisfaction was to communicate to the other party that the adjudicator's decision is not accepted as final and binding; and
• it was not necessary to set out the grounds on which the decision was disputed, and it did not matter that the email relied upon only referred to a jurisdictional challenge and not the underlying correctness of the adjudicator’s decision.

And the Court’s decision…

The decision on a point of law was not ‘obviously wrong’. The arbitrator had applied the correct test i.e. the notice requires:

1. the identification of the matter which the party disputes; and
2. that it intends to refer the matter to the tribunal.

As part of the suite of NEC contracts renowned for being written in plain English, it is perhaps unsurprising that the Courts have chosen to support the plain English interpretation of clause W2.4(2).

It serves as an important reminder for parties to carefully read the contract to preserve the right to refer a dispute for final determination by the chosen tribunal.