Bovis Homes Ltd v Kendrick Construction Ltd [2009] EWHC 1359 (TCC)

Bovis Homes Ltd v Kendrick Construction Ltd [2009] EWHC 1359 (TCC)

In this case, Kendrick Construction Ltd instructed Bell Lax.

Bovis Homes had engaged Bell Lax’s client to carry out and complete the design and construction of 48 sheltered housing apartments and three retail units in Birmingham. The contract incorporated the JCT Standard terms, which contained an arbitration agreement.

Almost 9 years following the completion of the work, Bovis Homes put Kendrick Construction on notice of alleged defects in the works. Bovis sent pre-action letter of claim to Kendrick Construction. Bell Lax replied to this on behalf of its client in accordance with the pre-action protocol and raised the issue of limitation. Subsequently, Bovis issued proceedings to protect the limitation position.

It was not until Bovis served the proceedings that it became apparent that the contract with Kendrick contained an arbitration clause.

Bell Lax expressed a preference for the dispute to be dealt with in arbitration. Bovis Homes refused to consent to a stay. Bell Lax therefore made an application under the Arbitration Act 1996 section 9 on behalf of Kendrick Construction.

Bovis did not object to the grant of the stay, but sought the costs thrown away by the late raising of the arbitration point.

The judge ultimately accepted Bell Lax’s application.

Bell Lax sought to resist Bovis Homes on the issue of costs thrown away.

We argued that the response to the letter of claim made no mention of arbitration because, whatever its contents might indicate, Kendrick did not have a copy of the Standard Form Contract itself in the form that had actually been executed. It was submitted that due to the fact that Kendrick had not at that point seen the executed version of the Standard Form of Contract, there was no onus on Kendrick to raise their preference for arbitration in the letter of response.

However, it was judged by the court that Kendrick Construction knew that the contract was likely to contain an arbitration agreement and there was no reason to believe that any arbitration agreement had been deleted or amended in any way.

Due to the not insubstantial sums claimed by Bovis Homes, this matter gave rise to an important issue in connection with the Pre-Action Protocol for Construction and Engineering Disputes.

The judge ruled that the mere fact that Kendrick Construction did not have a copy of the executed version would not have prevented it expressing a preference for arbitration in the letter of response, as required by the pre-action protocol.

It is important for parties to exchange fully their views, not only on the underlying dispute, but, if relevant, how that dispute should be tried. In such a situation, where a party has no reason to believe that an arbitration clause is absent from a contract despite not having an executed version of the contract, the prospect of arbitration should nevertheless be raised as soon possible in order to comply with the spirit of the protocol.