Category Archives: Construction Law

Construction: Employer could not challenge adjudication in enforcement proceedings

In construction disputes if an adjudicator has decided the issue referred to him, and he has acted in accordance with natural justice, his decision will be enforced by the court.

The defendant must pay now and argue later.

There are two narrow exceptions to this rule:

1. Involves an admitted error. For example a calculation error admitted by everyone, including the adjudicator. Here in the absence of an arbitration clause, the court would have jurisdiction to make a final decision on the point, and correct the error. However if there is an arbitration clause in the construction contract, the court would not have the power to determine the issue and the decision would be enforced.

2. Involves the proper timing, categorisation or description of the relevant application for payment, payment notice or payless notice. However it would not be open to a defendant to seek to avoid payment of a sum found due by an adjudicator by raising the very issue on which the adjudicator ruled against the defendant in the adjudication.

If the issue is a short and self-contained point, which requires no oral evidence or any other elaboration than that which is capable of being provided during a relatively short interlocutory hearing in the court enforcement proceedings, then the defendant may be entitled to have the point decided by way of a claim for a declaration.

It is envisaged at paragraph 9.4.3 of the Technology and Construction Court Guide that separate Part 8 proceedings will not always be required in order for such an issue to be decided at the enforcement hearing.

This procedure will rarely be used, because it is very uncommon for the point at issue to be capable of being so confined.

Very often, the defendant’s point is straightforward: the adjudicator was wrong and that, with regard to its timing, or its content, the relevant payment notice was invalid and/or that the defendant’s pay less notice was valid and prevented payment. Here, the defendant will have issued Part 8 proceedings seeking a declaration to that effect, and the claimant may issue its own enforcement claim or,the parties may agree that, if the defendant loses its Part 8 claim, it will pay the sums awarded by the adjudicator in any event.

These “consensual approach” cases all involved a significant degree of agreement between the parties. In particular, they all involved CPR Part 8 claims issued by the defendant challenging the decision of the adjudicator, and seeking a final determination by way of court declaration.

In all those cases:

1. There was a tacit understanding that the parties’ rights and liabilities turned on the decision as to whether or not the particular notice had been served in time and/or was a valid application for payment or payment/pay less notice.

2. The issue of a separate Part 8 claim was important in two respects:

2.1 it provided a means whereby the defendant could detail its challenge to the adjudicator’s decision so that the claimant could see and understand the precise basis of the challenge and the declarations sought and

2.2 the existence of a separate Part 8 claim meant that the court knew what was going to be involved at any subsequent hearing. This was vital to the court for the making of directions. A Part 8 claim means more involved arguments than would ordinarily arise on an adjudication enforcement, so the court will be able to list the hearing for a longer timeslot, and will be less concerned about fixing it within the usual 28 days.

Problems have arisen elsewhere because there has been no such consent.

This was the position in Hutton Construction Lted v Wilson Properties (London) Ltd [2017].

Here the High Court laid down the following guidelines for these cases:

1. The defendant must issue a CPR Part 8 claim setting out the declarations it seeks or, at the very least, indicate in a detailed defence and counterclaim to the enforcement claim what it seeks by way of final declarations. A prompt Part 8 claim is the best option.

2. Where there is a dispute between the parties as to whether or not the defendant is entitled to resist summary judgment on the basis of its Part 8 claim, the defendant must be able to demonstrate that:

(a) there is a short and self-contained issue which arose in the adjudication and which the defendant continues to contest;

(b) that issue requires no oral evidence, or any other elaboration beyond that which is capable of being provided during the interlocutory hearing set aside for the enforcement; and

(c) the issue is one which, on a summary judgment application, it would be unconscionable for the court to ignore. For example, that the adjudicator’s construction of a contract clause is beyond any rational justification, or that the adjudicator’s calculation of the relevant time periods is obviously wrong, or that the adjudicator’s categorisation of a document as, say, a payment notice is wrong, when, on any view, it was not capable of being described as such a document.

Such an issue could still only be considered by the court on enforcement if the consequences of the issue raised by the defendant were clear-cut. If the effect of the issue that the defendant wishes to raise is disputed, it will be most unlikely for the court to take it into account on enforcement. Any arguable inter-mingling of issues would almost certainly be fatal to the defendant being able to claim that their challenge falls within this limited exception.

The dispute between the parties as to whether or not the issue should be dealt with on enforcement would have to be dealt with shortly at the enforcement hearing itself. Due to the inevitable time constraints of such a hearing it will be rare for the court to decide that the issue can still be raised as a defence to the enforcement application even though the issue and its effect is disputed.

Because it is a potential abuse of the court process, a defendant who unsuccessfully raises this sort of challenge on enforcement will almost certainly have to pay the claimant’s costs of the entire action on an indemnity basis. Conversely, if the claimant does not agree to the defendant’s proposal to deal with the issue on enforcement, but the court finds that the issue does fall within the limited exception, it is the claimant who runs the risk of being penalised in costs.

In this particular case

1. It was common ground that:

1.1 The proper meaning and interpretation of the documents was a straightforward matter for the court. No other evidence of any kind was required.

1.2 If the adjudicator was wrong, and those documents did not constitute a proper claim for payment or a payee’s notice, then the defendant’s payless notice was valid and there is no entitlement to summary judgment.

So it was one of those rare cases where the substantive point in issue can be determined at the enforcement hearing.

2. The defendant’s challenge was of a type which should have been the subject of a separate Part 8 claim at the outset. The defendant’s solicitor’s correspondence did not make clear how and why the enforcement was being resisted. Neither did the witness statement.

So, it was only when the Part 8 claim was provided that the claimant (and the court) was given an inkling as to the defendant’s stance. But even that was inadequate. No specific declarations were sought in the Part 8 claim.

Further the defendant endeavoured to rerun the issues in the adjudication and rely on other matters too, such as the earlier sequence of interim applications and how they were dealt with by the parties. The court, on an adjudication enforcement, simply could not deal with all of the points – and more – raised in the adjudication.

The defendant now wished to rely on a number of factual matters. Once they have been set out properly, they might be agreed, but the claimant had not had sufficient time to consider them and its precise response. There may well be disputes. That was another reason why the defendant’s challenge was wholly inappropriate for any consideration on the summary judgment application.

The adjudicator’s decision ran to 73 closely-typed paragraphs. The adjudication had lasted from 11 October to 15 November 2016. The court had seen only some of the documents relating to the adjudication.

Absent any consent from the claimant, it could not be right, to let the defendant shoehorn into the time available at the enforcement hearing the entirety of that adjudication dispute.

“Such an approach would mean that, instead of being the de facto dispute resolution regime in the construction industry, adjudication would simply become the first part of a two-stage process, with everything coming back to the court for review prior to enforcement. That …. cannot be permitted.^

The challenge to the adjudicator’s decision failed and the claimant was entitled to summary judgment.

The defendant could pursue its Part 8 claim separately. The defendant would need to amend that claim and there needed to be a proper exchange of pleadings.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Court issued claim within limitation period despite wrongness of fee

In a case where a Claimant innocently fails to pay the correct court fee close to the end of a limitation period the question may arise whether that action was “brought” within the limitation period. Much will turn on which of the following two periods the problem arises in:

A) The period between:
(i) when the Claimant submits the claim form and puts forward the insufficient fee and
(ii) the Court issuing proceedings.

Here the failure to tender the correct fee will prevent any finding that the action has been “brought” for the purposes of the Limitation Act 1980 unless the Court actually issues the proceedings notwithstanding the fee being inappropriate; and

B) The period after the Court issues the proceedings.

Here the mere fact that the fee proffered by the Claimant and accepted by the Court:
(i) is less than should have been tendered and accepted for the claim identified in the Claim Form or
(ii) becomes so because of a subsequent increase in the quantum of the actual claim(s) advanced in the proceedings prior to the end of limitation period

does not prevent the action from being “brought” for the purposes of the Limitation Act 1980 when it is issued by the Court.

In Dixon & Anor v Radley House Partnership (A Firm) & Ors [2016] the High Court Judge said “where (a) abusive conduct is not present and (b) the court sets the wheels of justice in motion by issuing proceedings but (c) the Claimant has not paid and the Court has not required the correct fee, I reject the submission that an action is not brought for the purposes of the Limitation Act 1980 at the moment of issue.”

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Construction: Failure to serve notices did not preclude further adjudication

In Kilker Projects Ltd v Purton (t/a Richwood Interiors) [2016] the High Court had to decide whether failure to serve a ‘payment notice’ or ‘pay less notice’ as required by the Housing Grants, Construction and Regeneration Act 1996 (as amended) (“the 1996 Act”), prevented the paying party from challenging the payee’s contractual entitlement to that payment meaning that the ‘notified sum’ in section 111 of the 1996 Act became “final and conclusive” as to the sum due under the contract.

The claimant submitted that the 1996 Act and the Scheme for Construction Contracts (England and Wales) Regulations 1998 (amendment) (England) Regulations 2011 regulated payment and cash flow. They did not decide the true substantive entitlement to payment under the contract and they did not conclusively determine entitlement to payment. A party who had failed to give the requisite payment and/or pay less notices must pay the amount stated in the payee’s payment notice by the final date for payment. However, having paid, that party was then entitled to seek a determination of any dispute about the valuation of the contractual entitlement of the contractor for the works, and it could do so in adjudication.

The defendant said the effect of a failure by a party to issue a payment notice and/or a pay less notice was that the payer agreed the payee’s valuation for that payment and must pay the application sum in full. In an application for final payment, a failure by a party to issue a payment notice and/or a pay less notice meant that the final account was agreed. It remained open to the payer to challenge the valuation in litigation or arbitration, for instance by proceedings for restitution, but the agreed valuation could not be re-opened in a subsequent adjudication.

The court agreed with the claimant:

“In Matthew Harding t/a MJ Harding Contractors v Paice [2015] the Court of Appeal determined that the employer could refer to adjudication the question of the true valuation of a final account following termination, despite an earlier adjudication ordering payment of the contractor’s application for final payment in full on the basis of a failure to serve a valid pay less notice. In upholding the decision of Mr Justice Edwards-Stuart at first instance, Jackson LJ, with whom the other judges agreed stated:

……. [78] In my view the employer’s failure to serve a Pay Less notice (as held by the previous adjudicator) had limited consequences. It meant that the employer had to pay the full amount shown on the contractor’s account and argue about the figures later. The employer duly paid that sum, as ordered by the previous adjudicator. The employer is now entitled to proceed to adjudication in order to determine the correct value of the contractor’s claims and the employer’s counter-claims.””

Therefore, the claimant had been entitled to refer the final account valuation to the adjudicator and was now entitled to have the amount awarded in that adjudication enforced.

This blog is posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Construction Scheme would not fill shortfall in Scheduled Payments

Sections 109(1) and 110 of the Housing Grants, Construction and Regeneration Act 1996 (“the Act”) require instalment payments to be made for all work under a construction contract lasting 45 days or more.

The parties are free to agree the amounts of the payments and the intervals at which, or circumstances in which, they become due. In the absence of such agreement, the relevant provisions of the Scheme for Construction Contracts (“the Scheme”) apply.

In Grove Developments Ltd v Balfour Beatty Regional Construction Ltd [2016] the defendant contractor said:
– it was entitled to serve an application for a further interim payment and
– that the claimant had failed to serve either a Payment Notice or a Pay Less Notice within the applicable time limits and that in consequence,
– the claimant was liable to pay the defendant £23,166,425.92.

The claimant countered that:

– the defendant had no contractual right to issue or be paid in respect of the application for a further interim payment and, so, the notice regime was irrelevant OR
– that on a true interpetation of the Contract the final date for payment was 18 September 2015 which would mean that the Pay Less Notice which it issued on 15 September 2015 was issued in time and effective.

The defendant contended that Section 109(1) of the Act requires instalment payments to be made for all work under a construction contract lasting 45 days or more. Here the Schedule of Payments only covered interim payments up to and including 22 July 2015. Since the construction contract failed to cover a further interim payment invoiced on 21 August 2015, the relevant timing provisions of the Scheme would apply to it.

The High Court said where sections 109 or 110 of the Act were engaged, the payment provisions of the Scheme would only be imported and apply to the parties to the extent that they have not already concluded binding contractual arrangements that can remain operative.

Those payment provisions would not automatically or necessarily be imported in their entirety.

The arrangements under a contract may be incapable of forming part of a payment scheme when read against the Scheme. Here it may be necessary to import the whole of the Scheme’s Payment provisions.

“But that is not a necessary or correct outcome if the existing contractual arrangements are capable of co-existing with some of the Payment provisions of the Scheme to form a coherent whole.”

There was no requirement as to when such payments are to be made: any arrangement which involved one or more instalment payments would be sufficient. Thus a contract prescribing one periodic payment, even of an insignificant amount, would seem to meet the requirements.

It followed that if the parties enter into an agreement about the amounts of the payments and the intervals at which, or circumstances in which, they become due, the mere fact that the agreement does not provide for interim payments covering all of the work under the contract is no reason to import the provisions of the Scheme to supplement their agreement so as to generate interim payments covering the work not covered by their agreement.

Under Section 109(2), the parties could agree stage payments by reference to stages at highly irregular intervals and for the payment of highly variable amounts. So, it would have been open to the parties to agree the front loading of payments in advance of the value of the work done or to agree that payments would be withheld until very late on. Indeed nothing in section 109(2) prevented the parties from agreeing that the amount of a payment shall be nil.

The parties’ agreement was clear and provided for 23 interim payments on the dates set out in the agreed Schedule and no more.

In Balfour Beatty Regional Construction Ltd v Grove Developments Ltd [2016] the Court of Appeal upheld this decision by a majority of 2:1.

The lead judge said:

” ….the express words used make it clear that the parties were only agreeing a regime of interim payments up to the contractual date for practical completion…….this is a classic case of one party making a bad bargain. The court will not, indeed cannot, use the canons of construction to rescue one party from the consequences of what that party has clearly agreed.”

To exclude the Scheme, the parties must draw up a system of interim payments in good faith. A “cynical device” to exclude the operation of the Scheme by prescribing one interim payment “of an insignificant amount” would be unlikely to be enough. Section 109(2) gives contracting parties a wide scope as to the nature of the regime they may agree.

Here the parties agreed a regime of twenty three interim payments right up to the date specified for practical completion. What had been agreed satisfied the requirements of section 109 of the Act.

Clause 4.14 of the contract provided an adequate mechanism for quantifying interim payments. So, however unusual the contract, it satisfied the requirements of section 110 of the Act.

Accordingly the Scheme did not apply and the appellant could not rely upon the Act and the Scheme to recover interim payments after July 2015.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Construction: Adjudicator’s powers survived “binding settlement”

Section 108 of the Housing Grants Construction and Regeneration Act 1996 says:

“(1) A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section.”

Where there is a dispute as to whether there has been a full and final settlement agreement between the contractual parties does the dispute arise “under” the construction contract or under the alleged settlement agreement or both?

In J Murphy & Sons Ltd v W Maher and Sons Ltd [2016] Murphy issued proceedings seeking a declaration that the adjudicator had no jurisdiction to entertain a dispute arising out of an alleged final settlement since:
– the alleged settlement agreement was a standalone agreement and
– there was no adjudication agreement applicable to that agreement and
– the disputed claim did not arise “under” the original sub-sub-contract.

The High Court said that adjudicator had jurisdiction because the adjudication clauses in the sub-sub-contract survived and were broad enough to cover a dispute arising under the alleged settlement agreement because that later agreement undoubtedly arose in connection with the original sub-sub-contract.

“A dispute as to whether all or some of the alleged entitlements which one contractual party has against the other has been settled in a binding way arises “under” the original contract.”

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Initial assessment valuation was not interim payment application

In Jawaby Property Investment Ltd v The Interiors Group Ltd & Anor [2016] the issue arose whether a valuation amounted to an interim payment application by the contractor (“TIG”).

The High Court said that the valuation was described only as TIG’s “initial” assessment. So the valuation was not TIG’s firm or final assessment.

For that reason it was not, and could not objectively be interpreted to be, a statement by TIG of what it considered was due to it for the purpose of Clause 4.8.1 of the Contract.

Rather it was only what TIG considered might be due to it, subject to further consideration.

TIG said that the word “initial” meant that it was TIG’s “first” valuation, intended to “get the ball rolling” for valuation purposes. The court said that was not remotely a statement by TIG of the sum that it considered to be due to it for the purpose of clause 4.8.1 of the Contract such as to carry the draconian consequences of the payment regime that followed the service of an interim payment application.

The reasonable recipient of the valuation would not have regarded it as unambiguously telling it that this was an interim payment application for the purpose of Clause 4.8.1.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Building Contract: alternative time for Pay Less Notice implied

Under section 111(3) of Housing Grants, Construction and Regeneration Act 1996 (as amended) (“the Act”) a payer can serve pay less notices.

By sub-section (5) the pay less notice must be given “not later than the prescribed period before the final date for payment” but not before the notice by reference to which the notified sum is determined. That notice may be an invoice.

The Act requires the following sequence of events:

-a payment due date,
-service by the contractor of a notice stating the sum due within five days thereafter,
-service of a pay less notice (if required) by the employer not later than the “prescribed period” prior to the final date for payment and,
-finally, payment (of the sum stated in the last notice) on the final date for payment.

Section 111(7) provides that the “prescribed period” means either such period as the parties may agree or, in the absence of such agreement, the period provided by the Scheme for Construction Contracts (“the Scheme”), which is 7 days. So, if there has been no agreement as to the prescribed period, then it is 7 days.

In Manor Asset Ltd v Demolition Services Ltd (Rev 1) [2016] the dispute was about the non-payment of Demolition Services Ltd (DSL)’s invoice for 60% of the price which DSL issued on 23 October 2015, asserting that it had achieved the first milestone in accordance with the terms of the building contract. DSL said under the building contract “payment [was] to be made within 72 hours of receipt of invoice, issued when the milestone [was] achieved”, namely on or by 26 October 2015. So, it contended that the pay less notice issued by Manor Asset Ltd (MAL) on 28 October 2015 was invalid. The adjudicator said that MAL should have issued a pay less notice before 23 October 2015.

However the High Court said that the Act made it clear that the pay less notice could not be issued before the invoice to which it related.

Unless there was a compelling reason to give them any other meaning, the contract words “Payment to be made within 72 hours of receipt of invoice” were clear and unequivocal. They must be understood as referring to “the final date for payment.” They could not have been referring to the deadline for service of the pay less notice.

Clause 4.5.4 of the contract had said the prescribed period for service of the pay less notice expired on the date 5 days before the final date for payment. That date would have been non compliant with the Act and impossible since it would have been 21 October 2015. That date would have been two days before the notice stating the sum due which had only been afforded by the issue of the invoice.

On that reasoning the parties would have reached no agreement about the prescribed period, with the result it defaulted to the even more non compliant and impossible period ending “7 days” before the final date for payment, under the Act.

This was, therefore, a situation where the building contract made no express provision for what was to happen in relation to pay less notices.

It was therefore necessary to construe the contract or imply a term, that the prescribed period was to be “nil” – thus enabling MAL to serve a pay less notice at any time within 72 hours after receipt of the invoice. In other words, it could be served at any time between receipt of DSL’s invoice and the expiry of the 72 hours following such receipt.

MAL’s “pay less” notice dated 28 October 2015 was therefore out of time and DSL was entitled to summary judgment on it’s claim.

This blog is posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Failure to serve Pay Less Notice did not prevent final account being challenged for all time

In Paice & Anor v MJ Harding (t/a MJ Harding Contractors) [2015] the contractor argued that:

1. if an employer wishes to pay less than the sum stated in the contractor’s account under clause 8.12 of the building contract, which incorporated the JCT Intermediate Form 2011 edition, it must issue a “Pay Less Notice”.

2. So the employer could only set aside the adjudicator’s decision to award the sum stated in the contractor’s clause 8.12 account in subsequent litigation by showing that its Pay Less Notice was validly served in time.

3. So if the employer failed to to serve a valid Pay Less Notice in time, it would deprive the employer of the right to challenge the contractor’s account.

The High Court pointed out that this would apply for all time even if the contractor had seriously overvalued his account and that the contractor would thereby obtain a windfall that the employer could never recover.

That would subject interim certificates to a more draconian regime than that which applies to the Final Certificate.

In the case of Final Certificates, if the employer commences adjudication or litigation within 28 days of it being issued, it ceases to be conclusive in respect of the matters raised in the litigation or adjudication (clause 1.9).

The High Court said that what would be due under clause 8.12.5 would be the “… amount properly due in respect of the account”.

In this case the adjudicator had not determined what was “properly due”.

He had decided that, in the absence of a valid Pay Less Notice, the employer had to pay the amount stated in the contractor’s account within 28 days.

The Court of Appeal has now backed the High Court. They said the employer could challenge the valuation arrived at on the contractor’s final payment application by applying for a further adjudication even though they had failed to issue a proper payment or Pay Less Notice.

The court said the employer’s failure to serve a Pay Less Notice had limited consequences. These were mainly that the employer had to pay the total shown on the contractor’s account and dispute the figures later. The employer had paid that amount, as the previous adjudicator had ordered. The employer could now proceed to adjudication in order to ascertain the true value of the contractor’s claims and of the employer’s counter-claims. So the High Court Judge had got this right.

So whilst the employer must comply with the adjudicator’s decision in the meantime by paying the sum ordered, it remains open to the employer to initiate further adjudication or litigation to decide what sum is properly due in respect of the contractor’s account.

Clearly the employer will want to avoid this drain on cash flow by serving the Pay Less Notice in time, especially if there are doubts as to the continuing solvency of the contractor when it comes to refunding the over payment.

This case helps in respect of final account payments. Here, a failure to serve a payment or Pay Less Notice will not usually prevent an employer from later challenging the true value of the work through adjudication or court proceedings.

The Court of Appeal has left the position in regard to interim payments less clear.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Contractual limitation clause did not trigger defence under Section 1(3) of the Limitation Act 1980

In a construction case a typical limitation clause in a collateral warranty said:

“Notwithstanding the date hereof no proceedings shall be commenced against the Contractor after the expiry of twelve years from the date of issue of the last written statement by the Client that practical completion of the Project has been achieved under the Contract”.

This presented a procedural bar to any right the beneficiary of the warranty may have against the contractor being enforced in proceedings brought by the beneficiary issued after the cut-off time.

In the case of Bloomberg LP v Malling Pre-Cast Ltd [2015] the High Court ruled that this clause did not of itself extinguish the underlying substantive right, which might remain.

So, in proceedings by the beneficiary of the warranty against them, the project’s engineers might issue Part 20 proceedings against the scheme’s contractor claiming a contribution under section 1 of the Civil Liability (Contribution) Act 1978 and the limitation clause did not prevent that.

So the contractor had not demonstrated that the engineer had no real prospect of succeeding in its Part 20 Claim.

Outwith the clause, it may be that issues of limitation would arise later in the Part 20 proceedings or even in the main action but it was too early in the proceedings to say.

If as a matter of general law, the contractor could be said to have “ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against” the contractor was based, this would entitle the contractor to a limitation defence under the proviso contained in section 1(3) of the Limitation Act 1980, quite independently of warranty’s limitation clause, in respect of the damage.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Adjudication: Linked issues formed single dispute

In Whitney Town Council v Beam Construction (Cheltenham) Ltd [2011] Akenhead J gave guidance as to one way of identifying whether or not two separate disputes had been invalidly referred to an adjudicator:

“A useful if not invariable rule of thumb is that if a disputed claim No 1 cannot be decided without deciding all or part of disputed claim No 2, that establishes such a clear link and points to there being only one dispute.”

In that case a claim for a final account and a claim for the financial consequences of termination were ruled part of a single dispute.

In Wycombe Demolition Ltd v Topevent Ltd [2015] an adjudicator awarded £113,666.63, with interest and his fees and expenses due from the employer (“Topevent”) to the claimant contractor (“Wycombe”).

Topevent complained that the adjudicator had no jurisdiction because more than one dispute was referred to him. The adjudicator was addressing both the issue of valuation and, what they said, were separate issues arising out of the termination/cessation of the works, and that they were two entirely separate disputes.

The High Court said it was plain from the Notice of Adjudication that the dispute between the parties concerned the outstanding payment due to Wycombe, following the cessation of works on site.

That payment was made up of a number of elements, including both the value of variations, and the financial consequences of termination and demobilisation.

There was a claim for one final payment comprising all outstanding sums, including the £4,000, for “wrongful termination of contract.” Wycombe wanted one final payment so as to be able to close their books on this contract. That could only be achieved if the adjudicator addressed all their outstanding claims. So there was a clear link between their rejected claim for the cost consequences of the “wrongful termination”, and the overall claim for all sums outstanding. They were not separate disputes.

Secondly Topevent’s representative had written a letter saying that the valuation of Wycombe’s work could not be carried out properly unless the amount of incomplete work was taken into account. That letter made a direct link between those two issues.

Accordingly, both elements of the claimed payment were part of a single dispute. They were simply different components of the total sum in dispute.

Even if there were two separate disputes paragraph 11.1 of the TecSA Rules which were the basis of the adjudicator’s appointment made it clear that the adjudicator could deal with “any further matters which all Parties agree should be within the scope of the Adjudication”.

The disputes concerned with the valuation of the work, and the dispute about termination, were addressed without qualification by both parties during the adjudication.

Indeed, Topevent’s counterclaim of approximately £180,000 was based on the latter. But Topevent had never suggested that the termination dispute should not be dealt with in the adjudication. In fact, they wanted it so decided.

So if were two separate disputes, Topevent’s acquiescence in, and failure to object to, the adjudicator dealing with both disputes, gave him the necessary jurisdiction anyway.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.