Dispute resolution clause, mistaken interpretation and cancellation of contract: Jade Residential Limited v Paul

Abstract

Jade Residential Ltd (Jade) entered into a contract to build a house for a couple, the Pauls. Progress payments were required when certain construction “milestones” were met. Two of the “milestones” were “closed-in” and “lined”. Jade was required to “maintain a continuous construction programme until completion”, but was allowed to suspend work in certain circumstances including the Pauls’ failure to pay monies due. The contract includes a dispute resolution clause (cl 27) which provided that if any dispute arises the parties shall meet promptly in good faith and use their best endeavours to resolve such dispute, if such dispute has not been resolved then any party may give a dispute notice, the parties shall refer the dispute to mediation once dispute notice is given, and neither party may issue any arbitration or legal proceedings unless that party has first taken all reasonable steps to comply with this clause.