Citation: [2014] EWHC 3824 (TCC)
The Claimant building contractor (“the Claimant”) applied for an injunction to prevent the Defendant property developers (“the Defendants”) from proceeding with a reference to a fourth adjudication. The application was made on two grounds initially but, as a result of the former being stayed, the only ground remaining at trial was an allegation that the appointed adjudicator lacked jurisdiction because the dispute was the same or substantially the same as one that had already been decided. The contract between the parties was in the JCT Intermediate form (2011 ed.) and incorporated the adjudication provisions of the Scheme for Construction Contracts (“the Scheme”). The dispute that had been referred under the previous adjudication (“the third adjudication”) related to the Defendants’ refusal to pay, in full, sums due in respect of the Claimant’s latest account, dated 8 August 2014. The Claimant’s position was that, if the Defendants had wanted to pay less, they were required by the Scheme to issue a Pay Less Notice within a stipulated period, which it had failed to do and in the alternative it was entitled to the value of the latest account for the works carried out. The adjudicator found it necessary to decide who had terminated the contract and whether or not the Defendants had issued a compliant Pay Less Notice and both of these issues were resolved in favour of the Claimant. This meant the Defendants were ordered to pay the £397,912.48 outstanding. The fourth adjudication was referred by the Defendants who disputed the value of the works undertaken and claimed entitlement in relation to defects. Relying on Clause 8.12.5 of the contract, the Defendants argued that they were only required to pay “the amount properly due in respect of the account”, as opposed to the amount stated in the Claimant’s account, and this was a matter that had not been considered by the previous adjudicator. It was submitted on behalf of the Claimant that: (i) the third adjudicator had determined the amount due under clause 8.12.5 so that the employer could not re-open this issue; (ii) the absence of a compliant pay-less notice meant that there was no further scope to challenge the amount properly due under clause 8.12.5 or at all; and (iii) paragraph 9(2) of Part I of the Scheme, which requires the resignation of the adjudicator where the dispute was the same or substantially the same as had previously been decided, was triggered where a dispute referred to a new adjudicator was the same or substantially the same as one which had been previously referred to adjudication and a valid decision had been made by the previous adjudicator. On a true construction of the regulation, it did not matter whether or not the previous adjudicator’s decision encompassed the full scope of the dispute referred to him. Mr Justice Edwards-Stuart rejected the Claimant’s submissions, deciding that: (i) the third adjudicator had not determined the amount “properly due”; he had merely determined that, in the absence of a valid Pay Less Notice, the Defendant had to pay the amount stated in the Claimant’s account within 28 days. (ii) the absence of a compliant Pay Less Notice did not convert a sum that may not be properly due into one that was properly due; therefore it was open to the Defendants to have this question determined in a further adjudication. The Defendants were however required to comply with the third adjudicator’s decision in the meantime. (iii) on a proper construction of paragraph 9(2) of the Scheme, a decision by an adjudicator on a party’s primary case did not prevent a second adjudicator from determining the alternative case, if this became necessary to decide. To find otherwise would be inconsistent with authority (see for example Benfield Construction Ltd v Trudson (Hatton) Ltd [2008] EWHC 2333 at [34]); what mattered was what the previous adjudicator had decided, rather than the scope of the dispute referred to him (Quietfield Ltd v Vascroft Construction Ltd [2006] EWCA Civ 1727).
Counsel: Gideon Scott Holland appeared on behalf of the Claimant.
