The recent Court of Appeal decision of (1) Andrew Brown (2) Caroline Brown v Complete Buildings Solutions Limited is a helpful reminder of how the courts approach the issue of an adjudicator’s jurisdiction where it is alleged that the dispute has already been decided in a previous adjudication.
Mr and Mrs Brown (the Employers) and Complete Buildings Solutions Limited (the Contractor) entered into a JCT Minor Works Building Contract (2011 Edition) dated 22 December 2011 (the Contract) to demolish a house and to build a new house.
The Architect issued a Final Certificate under the Contract on 31 October 2013 and on 20 December 2013, the Contractor served a letter requesting a final payment of £115,450.50 which was due from the Employers. Payment for this sum was not made and a Notice of Adjudication was served on 7 February 2014.
Mr Calcroft who was appointed as adjudicator, issued his decision on 1 April 2014. He concluded that the Final Certificate was ineffective but also the Contractor’s letter dated 20 December 2013 was not a valid payment notice in accordance with Clause 184.108.40.206 of the Contract as it failed to make clear that it was:
- i. a notice and
- ii. issued pursuant to Clause 220.127.116.11 of the Contract.
He held that as no payment notice has been served, no sum was payable.
The Contractor sent to the Employers on the same day a letter described as a ‘notice pursuant to Clause 18.104.22.168 of the Contract’ (Second Notice) and on 24 April 2014, issued a Notice of Adjudication. A new adjudicator was appointed, Mr CJ Hough on 29 April 2014.
The Employers disputed Mr Hough’s jurisdiction on the basis that he was being asked to decide the same, or substantially the same dispute which resulted in the decision in the first adjudication. As a result, the Employers refused to participate in the adjudication and failed to serve a notice under Clause 22.214.171.124 of the Contract which required them to give notice of their intention to pay less than the amount claimed for.
The Scheme, which applied in this instance, provides that an adjudicator must resign where the dispute is the same or substantially the same as one which has previously been referred to adjudication, and a decision has been taken in that adjudication. Mr Hough issued his decision on 27 May 2014 where he concluded that he was not being asked to decide on the same or substantially the same issue as had been referred to Mr Calcroft.
He found that Mr Calcroft decided that no certificate had been issued in accordance with Clause 4.8.1 and that decision was binding on both parties. However, Mr Hough concluded that the Second Notice was effective under Clause 126.96.36.199 and the Employers’ failure to make the payment resulted in a dispute which was not the same or substantially the same as in the first adjudication.
Given that the Employers had failed to serve Pay Less Notice, Mr Hough decided that the Employers were obliged to pay the Contractor the amount claimed under the Second Notice plus interest.
The Employers subsequently did not pay the ordered sums and the Contractor commenced proceedings at the Technology and Construction Court. Summary judgment was granted by Judge Raynor QC in favour of the Contractor in the sum of £118,500 plus costs. An application to set aside judgment was made by the Employers, this was dismissed and further costs were ordered to be paid.
The Employers appealed the judgment.
The Court of Appeal considered the Employers’ argument that Mr Hough was being asked to consider the same or substantially the same dispute as Mr Calcroft had been asked to determine. However, the Court found that whilst the sum of money in question was the same the difference arose from the fact that there had been no valid Clause 188.8.131.52 notice within the first adjudication. The second adjudication, however, required Mr Hough to decide whether a different notice served 4 months later had different consequences.
It was found that the Second Notice resulted in the Contractor’s entitlement to be paid. The Contractor was not attempting to change the decision in the first adjudication but was approaching its claim via a new and different route, relying upon the Second Notice resulting in a different dispute. So the appeal was dismissed.
The Court, has yet again, shown that overly technical arguments will not act as a bar to enforcing an adjudicator's decision leaving the Employer here with two bites from two different cherries.