September 7, 2022

Notices of dissatisfaction and NEC: Getting the notice right

The importance of getting a notice of dissatisfaction right in all construction contracts cannot be understated.

If either party fails to issue a notice of dissatisfaction as necessitated under the contract, this can have serious consequences.

There have been three recent decisions that have considered notices of dissatisfaction under New Engineering Contracts (NECs) which have illustrated the importance of getting the notice right.

The cases in question are Transport for Greater Manchester v Kier Construction, Prater Ltd v John Sisk & Sons (Holdings) Ltd, and the Metropolitan Borough Council of Sefton v Allenbuild Ltd.

We discuss the outcome of each of these further down the article.

What is a notice of dissatisfaction?

The Construction Act stipulates that an adjudication decision is temporarily binding until determined by Court or arbitration.

Certain contracts require a notification to be issued, usually within a specified time frame, if a party wants to preserve the right to challenge an adjudication outcome.

In the NEC suite of contracts, this is known as a notice of dissatisfaction.

The cases in question

As mentioned, each of these cases highlighted how important getting a notice of dissatisfaction right.

In Transport for Greater Manchester v Keir Construction, the Court examined a situation under NEC3 where, after adjudication in late 2019, the employer’s solicitors wrote to the contractor’s solicitors.

The letter stated that while the client did not accept the decision, it would make payment recognising the decision was temporarily binding.

This was not considered to be a valid notice of dissatisfaction, and the decision became final and binding.

Prater Ltd v John Sisk & Son (Holdings) Ltd illustrated the enforceability of a valid notice of dissatisfaction in the context of jurisdiction.

It showed that while a valid notice of dissatisfaction protects the right to later challenge a decision, it does not affect its enforceability in the interim.

In The Metropolitan Borough Council of Sefton v Allenbuild Ltd, the court rejected an application for a stay pending referral of the dispute of arbitration.

One of the arguments in the case was that a notice of dissatisfaction has to make it apparent whether a challenge is being made to the validity of an adjudicator’s decision on jurisdictional grounds.

This is instead of, or in addition to, a challenge to its substantive merits.

Put another way, a notice of dissatisfaction should make clear the basis on which the challenge is being made.

If you need advice about an NEC or notice of dissatisfaction, contact us today.