Until relatively recently adjudication was plagued by "no dispute" arguments. Responding parties in adjudications would say that the adjudicator lacked jurisdiction to make a decision because the claim referred to him had not crystallized into a dispute when the adjudication began (the adjudicator only being able to decide a dispute). The argument sometimes succeeded only when a decision came to be enforced (rendering it void) however vigorously the claim was defended in the adjudication.
A judgment given last Tuesday adopts a common sense application of the now established case law on when a dispute crystallizes.
A contractor referred to adjudication a dispute about its entitlement to payment under an amended JCT 1998 With Contractor's Design form. Its claim was based on an application for payment and the employer’s failure to issue a payment notice. While section 110 of the Construction Act specifies no sanction for not giving a payment notice, the JCT 1998 WCD form does by requiring the amount applied for to be due. (The equivalent form in the JCT 2005 suite also requires payment notices - which is critical for current purposes - but provides no sanction for their non-issue).
The adjudicator duly awarded the contractor the sum stated in the application for payment. The employer sought to resist enforcement of the adjudicator’s decision, claiming that the adjudicator lacked jurisdiction because the referred dispute had not crystallized before the adjudication began. The court disagreed. The contractor’s application for payment was a claim for payment in respect of the sum therein stated. That amount fell due immediately after the employer failed to give the payment notice. It did not matter that the contractor did not expressly raise a claim based on the lack of a payment notice before the adjudication. Such a claim was encompassed by the claim made under the application for payment.
The dispute arguably arose when the payment notice was not given. However, the precise timing of when the dispute arose did not have to be decided because the value of the contractor’s entitlement under the application for payment was clearly disputed before the adjudication by a (late) withholding notice.
Interestingly the judge also said that there is no good reason to differentiate when a dispute arises for the purposes of arbitration (unlike some Court of Appeal judges who have suggested both higher and lower "dispute" thresholds for adjudication). Had the employer’s argument succeeded it would have placed an unwelcome additional hurdle in the way of a payee’s right to adjudicate.
Law: Ringway Infrastructure Services Limited v Vauxhall Motors Limited [2007] EWHC 2421 (TCC). Click here for a link to the judgment.
For further information, please contact Adrian Bell who, with Rupert Choat (who was also Junior Counsel), acted for the successful contractor, Ringway.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 29/10/2007.
