Adjudication – Enforcement – Summary judgment – Claimant contractor commencing enforcement proceedings to enforce adjudication award – Claimant seeking declaration that second adjudication award invalid for want of jurisdiction – Claim allowed
The claimant contractor was engaged by the defendant college to carry out works at its premises. The form of the contract was the JCT Design and Build Contract 2011. In accordance with section 109 of the Housing Grants, Construction and Regeneration Act 1996, it provided for interim payments to the claimant at defined intervals. A dispute arose concerning payment for the work done and the matter was referred to adjudication. In the first adjudication, the adjudicator decided that the claimant was entitled to £1,097,696.29 which was the sum claimed in its application for payment number 13 plus interest, because the defendant had not served either a payment notice or a pay less notice in accordance with the provisions of the contract.
A notice of adjudication in the second adjudication was served by the defendant four days before the adjudicator made his decision in the first adjudication. It was clear that the defendant, aware that it had not served the relevant notices in time, was seeking to frustrate or reduce the impact of the likely decision in the first adjudication in the hope that it could obtain a decision in the second adjudication that the value of the claimant’s works up to the date of the application was less than the amount claimed by the claimant.
The adjudicator decided in the second adjudication that the value of the claimant’s works as at the date of application number 13 was £315,450.47. In fact, the adjudicator accepted the claimant’s valuation of its measured works but rejected the claim for loss and expense, which was a little over £1m. He concluded that the true value of the loss and expense claim was a little over £300,000 so that the claimant had been overpaid. He directed, on the assumption that the defendant had already paid the claimant against the first adjudication that the claimant should repay the difference, which was £768,525.36. The defendant did not comply with the decision in the first adjudication, although it accepted that it had to do so, subject to the decision in the second adjudication.
The claimant commenced enforcement proceedings seeking to enforce the decision in the first adjudication and a declaration that the decision in the second adjudication was invalid for want of jurisdiction.
Held: The claim was allowed.
As between contractor and employer, in the absence of any notices, the amount stated in the contractor’s application as the value of the works executed was deemed to be the value of those works so that the employer had to pay the sum applied for. The starting point had to be the notice of adjudication and, in the present case, it could only be read as requiring the adjudicator to determine the true value of the claimant’s work at the date of application number 13. If the employer failed to serve any notices in time it had to be taken to agreeing the value stated in the application, right or wrong. In that situation, the first adjudicator had to be in principle to be taken to have decided the question of the value of the work carried out by the contractor for the purposes of the interim application in question. However, the agreement as to the amount stated in a particular interim application, and hence as to the value of the work on the relevant valuation date, could not constitute any agreement as to the value of the work at some other date. In this case, the claimant was entitled to a declaration that the decision in the second adjudication was invalid for want of jurisdiction. The adjudicator had decided a question that, as between the parties, had to be taken to have been decided by him on the first adjudication: Watkin Jones & Sons Ltd v Lidl UK GmbH [2002] EWHC 183 (TCC) considered.
Furthermore, if and so far as the adjudicator in the second adjudication was purporting to determine the valuation of the works at a date other than a valuation date and then to make a financial award on the basis of it, he was wrong to do so. The defendant had no contractual entitlement to such a valuation, still less to any financial award as a consequence of it.
Per curiam: The statutory regime would be completely undermined if an employer, having failed to issue the necessary payment or pay less notice, could refer to adjudication the question of the value of the contractor’s work at the time of the interim application (or some later date) and then seek a decision requiring either a payment to the contractor or a repayment by the contractor based on the difference between the value of the work as determined by the adjudicator and the sums already paid under the contract.
Alexander Hickey (instructed by Pinsent Masons) appeared for the claimant; Rupert Choat (instructed by Birketts LLP) appeared for the defendant.
Eileen O’Grady, barrister
Read a transcript of ISG Construction Ltd v Seevic College here
