Adjudicator – Award – Jurisdiction – Dispute arising in respect of contract for building and maintenance services – Claimant referring matter to adjudication in accordance with contract – Adjudicator making award in favour of claimant – Defendant challenging adjudicator’s jurisdiction to adjudicate on number of issues – Claimant seeking to enforce adjudicator’s decision – Whether adjudicator having jurisdiction to make award – Judgment for defendant in part
The defendant was a housing association company which was responsible for some 5,500 individual properties. The claimant was a contracting company which provided building and maintenance services, particularly in relation to housing associations. The parties entered into a contract under which the claimant agreed to provide a gas servicing and associated works programme relating to the defendant’s housing stock. The contract was based on the ACA Standard Form of Contract for Term Partnering (TPC 2005 amended 2008) for an initial period of four years, extendable at the defendant’s option for a further period of one year.
The defendant subsequently terminated the contract without giving a specific reason. The claimant expressed disappointment about the termination and sought consequential payments for recovery of overheads and profits as a result of the termination, contract set-up and termination costs, additional costs of maintenance to properties incurred in the first year overheads and profit on additional repair work.
The claimant subsequently served a notice of adjudication supported by a position statement in support of its financial heads of claim. The defendant objected that the referral notice had referred three distinct disputes when the relevant scheme only permitted a single dispute to be referred to adjudication at any one time. The adjudicator nonetheless considered that he had jurisdiction and proceeded with the adjudication. He decided that the claimant was entitled to payment of sums associated with the termination of the appointment (£383,778.91 plus interest) and that the defendant should pay the adjudicator’s fees.
The claimant brought proceedings to enforce the adjudication award. An issue arose whether the adjudicator had exceeded his jurisdiction by adjudicating on more than one dispute. The defendant issued proceedings under CPR Part 8 for a determination whether, on its proper construction, the contract provided any constraint, condition or qualification on the apparently unfettered right of either party to terminate the contract so that the adjudicator had been wrong to order the defendant to make the payment relating to overheads and profit and interest thereon.
Held: Judgment was given for the defendant in part.
(1) A dispute arose generally when a claim or assertion was made by one party and expressly or implicitly challenged or not accepted and might comprise a single issue or any number of issues within it. However, a dispute between parties did not necessarily comprise everything which was in issue between them at the time that one party initiated adjudication. What a dispute in any given case was would be a question of fact, albeit that the facts might require interpretation. Courts should not adopt an over legalistic analysis of what the dispute between the parties was, bearing in mind that almost every construction contract was a commercial transaction and parties could not broadly have contemplated that every issue between the parties would necessarily have to attract a separate reference to adjudication: Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] EWHC 2322 (TCC); [2011] BLR 707 applied.
Absent specific agreement, either in the original contract or on an ad hoc basis, authorities were sufficiently well-established to suggest that only one dispute could be referred to adjudication, albeit that the courts adopted a sensible and commercial approach in determining the relative width of any given dispute: Willmott Dixon Housing Ltd v Newlon Housing Trust [2013] EWHC 798 (TCC); [2013] PLSCS 65 considered.
On the facts of the present case, there was only one dispute referred to adjudication, albeit that it comprised three primary strands or issues. Both historically and on its face, the claimant’s compensation claim was one claim comprising three primary alleged financial entitlements which had been effectively challenged or at least not admitted prior to the initiation of the adjudication. Therefore, the adjudicator had jurisdiction to resolve all the issues put before him.
(2) In deciding whether, as a matter of construction, the contract provided for any constraint, condition or qualification on the apparently unfettered right to terminate, one had to determine objectively what a reasonable person with all the background knowledge reasonably available to the parties at the time of the contract would have understood the parties to have meant, adopting a more rather than less commercial construction. One needed to consider not just what the words in the relevant clause meant verbally but also what, looking at the contract overall, they were intended to apply to. It was legitimate to consider whether they were intended to apply to the termination provisions at all: John Jarvis v Rochdale Housing Association (1986) 36 BLR 10, Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 and Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 considered.
In the present case, there was no implied term of good faith in reference to the termination for convenience clause in the contract. Properly construed, the relevant provisions did not require the defendant to act reasonably as such in terminating the contract, which entitled either party to terminate for any or even no reason. The defendant was entitled to a declaration that, having exercised its right to serve notice to terminate the contract, the claimant had no entitlement, whether as damages for breach of contract, or as a sum due under the contract, to receive monies and/or compensation in respect of overheads and profit which it would have recovered over the balance of the term of the contract following termination had the contract not been terminated. It followed that the adjudicator had been wrong to order that the defendant should pay £383,778.91 to the claimant in relation to such overheads and profit, and interest thereon.
(3) However, the adjudicator did have jurisdiction to decide what he had, although he had reached the wrong conclusion. It followed that the defendant had to pay the adjudicator’s fee of £12,564 plus VAT.
Andrew Fenn (instructed by Hogan Lovells) appeared for the claimant; Marc Lixenberg (instructed by Trowers & Hamlins) appeared for the defendant.
Eileen O’Grady, barrister
TSG Building Services plc v South Anglia Housing Ltd
Adjudicator – Award – Jurisdiction – Dispute arising in respect of contract for building and maintenance services – Claimant referring matter to adjudication in accordance with contract – Adjudicator making award in favour of claimant – Defendant challenging adjudicator’s jurisdiction to adjudicate on number of issues – Claimant seeking to enforce adjudicator’s decision – Whether adjudicator having jurisdiction to make award – Judgment for defendant in partThe defendant was a housing association company which was responsible for some 5,500 individual properties. The claimant was a contracting company which provided building and maintenance services, particularly in relation to housing associations. The parties entered into a contract under which the claimant agreed to provide a gas servicing and associated works programme relating to the defendant’s housing stock. The contract was based on the ACA Standard Form of Contract for Term Partnering (TPC 2005 amended 2008) for an initial period of four years, extendable at the defendant’s option for a further period of one year. The defendant subsequently terminated the contract without giving a specific reason. The claimant expressed disappointment about the termination and sought consequential payments for recovery of overheads and profits as a result of the termination, contract set-up and termination costs, additional costs of maintenance to properties incurred in the first year overheads and profit on additional repair work.The claimant subsequently served a notice of adjudication supported by a position statement in support of its financial heads of claim. The defendant objected that the referral notice had referred three distinct disputes when the relevant scheme only permitted a single dispute to be referred to adjudication at any one time. The adjudicator nonetheless considered that he had jurisdiction and proceeded with the adjudication. He decided that the claimant was entitled to payment of sums associated with the termination of the appointment (£383,778.91 plus interest) and that the defendant should pay the adjudicator’s fees.The claimant brought proceedings to enforce the adjudication award. An issue arose whether the adjudicator had exceeded his jurisdiction by adjudicating on more than one dispute. The defendant issued proceedings under CPR Part 8 for a determination whether, on its proper construction, the contract provided any constraint, condition or qualification on the apparently unfettered right of either party to terminate the contract so that the adjudicator had been wrong to order the defendant to make the payment relating to overheads and profit and interest thereon.Held: Judgment was given for the defendant in part. (1) A dispute arose generally when a claim or assertion was made by one party and expressly or implicitly challenged or not accepted and might comprise a single issue or any number of issues within it. However, a dispute between parties did not necessarily comprise everything which was in issue between them at the time that one party initiated adjudication. What a dispute in any given case was would be a question of fact, albeit that the facts might require interpretation. Courts should not adopt an over legalistic analysis of what the dispute between the parties was, bearing in mind that almost every construction contract was a commercial transaction and parties could not broadly have contemplated that every issue between the parties would necessarily have to attract a separate reference to adjudication: Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] EWHC 2322 (TCC); [2011] BLR 707 applied.Absent specific agreement, either in the original contract or on an ad hoc basis, authorities were sufficiently well-established to suggest that only one dispute could be referred to adjudication, albeit that the courts adopted a sensible and commercial approach in determining the relative width of any given dispute: Willmott Dixon Housing Ltd v Newlon Housing Trust [2013] EWHC 798 (TCC); [2013] PLSCS 65 considered.On the facts of the present case, there was only one dispute referred to adjudication, albeit that it comprised three primary strands or issues. Both historically and on its face, the claimant’s compensation claim was one claim comprising three primary alleged financial entitlements which had been effectively challenged or at least not admitted prior to the initiation of the adjudication. Therefore, the adjudicator had jurisdiction to resolve all the issues put before him.(2) In deciding whether, as a matter of construction, the contract provided for any constraint, condition or qualification on the apparently unfettered right to terminate, one had to determine objectively what a reasonable person with all the background knowledge reasonably available to the parties at the time of the contract would have understood the parties to have meant, adopting a more rather than less commercial construction. One needed to consider not just what the words in the relevant clause meant verbally but also what, looking at the contract overall, they were intended to apply to. It was legitimate to consider whether they were intended to apply to the termination provisions at all: John Jarvis v Rochdale Housing Association (1986) 36 BLR 10, Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 and Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 considered.In the present case, there was no implied term of good faith in reference to the termination for convenience clause in the contract. Properly construed, the relevant provisions did not require the defendant to act reasonably as such in terminating the contract, which entitled either party to terminate for any or even no reason. The defendant was entitled to a declaration that, having exercised its right to serve notice to terminate the contract, the claimant had no entitlement, whether as damages for breach of contract, or as a sum due under the contract, to receive monies and/or compensation in respect of overheads and profit which it would have recovered over the balance of the term of the contract following termination had the contract not been terminated. It followed that the adjudicator had been wrong to order that the defendant should pay £383,778.91 to the claimant in relation to such overheads and profit, and interest thereon.(3) However, the adjudicator did have jurisdiction to decide what he had, although he had reached the wrong conclusion. It followed that the defendant had to pay the adjudicator’s fee of £12,564 plus VAT.Andrew Fenn (instructed by Hogan Lovells) appeared for the claimant; Marc Lixenberg (instructed by Trowers & Hamlins) appeared for the defendant.Eileen O’Grady, barrister
