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Beaufort Developments (NI) Limited v Gilbert Ash NI Limited: The Overturning of Crouch

By Tony Francis
Editorial in the Construction Industry Law Letter
June 1998

Editorial Comment

This month in CILL we report the significant decision of the House of Lords in Beaufort Developments (NI) Limited v Gilbert Ash NI Limited and others in which the decision of the Court of Appeal in Crouch as to the Court’s powers to review architect’s certificate has finally been overturned after some 14 years. It is ironic that this decision involved Gilbert-Ash. It was of course Gilbert-Ash who were a party to the landmark decision concerning set-off in Gilbert-Ash v Modern Engineering.

The five Law Lords were unanimous in their findings that Crouch was wrongly decided. Lords Hoffmann and Hope of Craighead gave the main judgment and extensive extracts of their judgments are reported and discussed in the commentary. What is apparent from a consideration of the judgment is the willingness of the Lords to find that Crouch was wrongly decided, which is perhaps not surprising given the criticism Crouch has received over the years. What is surprising is that Crouch has been with us for as long as it has. The Lords went on to add that Balfour Beatty v Docklands Light Railway was also wrongly decided on the Crouch point. The well-reasoned judgment of the House of Lords is to be contrasted with the somewhat convoluted reasoning of the Court of Appeal in Crouch.

The practical impact of this decision will be interesting. Today, arbitration rarely offers a cheaper or quicker alternative to the courts. The impact of the decision in Crouch generally ensured that it would be in the interest of at least one of the parties to a building contract to insist upon provision for arbitration. This latter consideration now no longer applies, and it must inevitably follow that parties to building contracts will for this reason alone be less inclined to opt for arbitration.
There are a number of further considerations, which suggest that parties will now increasingly reject arbitration clauses. First, enforcement of adjudicators’ awards should have better prospects of success through the courts, provided of course there is no arbitration clause; second, further reform of the Official Referees’ Court is currently undergoing consideration by the Lord Chancellor’s department with a view to further streamlining the Courts; procedures to try and ensure quicker and cheaper litigation.

However, if court proceedings do become significantly more popular than arbitration, this in turn raises very real concerns as to the capacity of the Official Referees’ Court to be able to adequately cope with a marked increase in its caseload given the finite number of Official Referees. There is, however, no shortage of arbitrators. If arbitrators are able and willing to use their expanded powers under the 1996 Act to ensure the effective economic and expeditious resolution of disputes, one would hope that arbitration would still offer a real alternative to court proceedings. Whether this will be the case remains to be seen.

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