Building contract - Adjudication - Award

Witney Town Council v Beam Construction (Cheltenham) Limited: Queen's Bench Division, Technology and Construction Court (Mr Justice Akenhead): 12 September 2011

The proceedings concerned the jurisdiction of an adjudicator. By a building contract made in early 2010 (the contract), the claimant employed the defendant to design and construct a new community hall. The contract was in standard form and contained an adjudication clause. Disputes arose between the parties in relation to, inter alia, the date that practical completion of the works occurred, various outstanding items of work, the extent to which the defendant was entitled to an extension of time and the amount of money due to the defendant from the claimant.

On 11 March 2011, the claimant purported to terminate the employment of the defendant under the contract on the basis that it was not proceeding regularly and diligently and had failed to do so notwithstanding what was said to be a contractual warning notice on 21 February 2011. The defendant served a notice of adjudication on 5 April 2011, which stated that a dispute had arisen between the parties requiring the decision of an adjudicator as to, inter alia: (i) what value was due to the defendant from the claimant; (ii) what the time for payment was; and (iii) what sum was due to the defendant as interest. An adjudicator was appointed by the Royal Institute of Chartered Surveyors and, on 11 April 2011, the defendant served its referral notice.

The referral notice, inter alia, dealt with issues that had emerged in relation to completion and asserted that the termination notice served by the claimant was void because there was no prior notice and in any event, no specified default had been made out. It further stated that a dispute had arisen between the parties requiring the decision of an adjudicator as to, inter alia: (i) what value was due to the defendant from the claimant; (ii) what the time for payment was; and (iii) what sum was due to the defendant as interest.

The claimant subsequently made it clear to the adjudicator that it considered that more than one dispute was being referred to adjudication, but the adjudicator promptly indicated that he did not consider the point a good one. The adjudicator issued his decision on 31 May 2011, in which he confirmed that he had dismissed the claimant's 'jurisdiction points' at the outset. The claimant was unwilling to pay what the adjudicator ordered and, after the defendant had commenced proceedings to seek to enforce the decision, the claimant commenced CPR Pt 8 proceedings. It was resolved that both sets of proceedings would be heard together.

The issue to be determined was whether the adjudicator had jurisdiction in the circumstances in which, it was submitted by the claimant, more than one dispute was referred to him and he dealt with all that was referred to him.

The court ruled: Having regard to previous authority, a number of principles applied. A dispute could 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; everything in issue at that time did not necessarily comprise one dispute, although it might do so. What a dispute was 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. Where, on a proper analysis, there were two separate and distinct disputes, only one could be referred to one adjudicator unless the parties agreed otherwise. An adjudicator who had two disputes referred to him did not have jurisdiction to deal with the two disputes.

Whether there were one or more disputes again involved a consideration of the facts. It might well be that, if there was a clear link between two or more arguably separate claims or assertions, that might well point to there being one dispute. A useful if not invariable rule of thumb was that, if disputed claim number one could not be decided without deciding all or parts of disputed claim number two, that established such a clear link and pointed to there being only one dispute (see [38] of the judgment).

On the facts of the instant case, there had in reality been only one dispute between the parties by the time of the Notice of Adjudication and only one dispute which had been referred to adjudication. That dispute had been as to what had been due and owing to the defendant (see [40] of the judgment). The adjudicator had had jurisdiction to decide what he did decide and his decision would be enforced (see [42] of the judgment).

Amec Civil Engineering Ltd v Secretary of State for Transport [2004] All ER (D) 443 (Oct) applied; Fastrack Contractors Ltd v Morrison Construction Ltd [2000] All ER (D) 11 explained; Bothma (t/a DAB Builders) v Mayhaven Healthcare Ltd [2007] EWCA Civ 527 considered; Cantillon Ltd v Urvasco Ltd [2008] All ER (D) 406 (Feb) considered.

Per curiam: 'It would be helpful and proportionate in future adjudication enforcement proceedings for parties to liaise in relation to the production of evidence to avoid substantial duplication in the exhibits. In this care there were four copies of the contract, three copies of the Notice of Adjudication, the Referral Notice and the adjudicator's decision and substantial duplication of correspondence. One-and-a half files would have sufficed here rather than the four files lodged. It wasted time and added unnecessarily to the costs.'

Mark Raeside QC and Omar Eljadi (instructed by Dutton Gregory LLP) for the claimant. Ian Wright (instructed by Harrison Clark LLP) for the defendant.