The courts have refused to enforce an adjudicator's decision valuing an interim application, as the adjudicator had previously decided a sum was owed by the Employer in the same interim application because of its failure to serve a pay less notice.
There were two adjudications. In adjudication 1, the Contractor had successfully claimed £1.1m from the Employer because the Employer had failed to serve a pay less notice disputing the sums were paid, and had refused to make payment in the amount of the Contractor's interim application.
4 days before the decision in adjudication 1, the Employer launched its own adjudication asking the adjudicator to value the sum that was due to the Contractor in the same interim application. It did so on the basis that the adjudicator was not making a decision in adjudication 1 as to the valuation of the Contractor's interim account. The adjudicator accepted that this was a different dispute, and decided that the Contractor should have been paid around £300,000, not the £1.1m awarded in Adjudication 1.
The Employer paid the Contractor £300,000. The Contractor issued enforcement proceedings to recover the other £800,000 in adjudication 1. The Employer issued its own enforcement proceedings in respect of adjudication 2.
The court said that in deciding first that £1.1m was payable, and then that the value of the account was only £300,000, the adjudicator had made two decisions about on the same dispute. A dispute can only be decided once by an adjudicator, and therefore the decision in adjudication 2 was invalid for want of jurisdiction.
This interesting case closes a possible loophole allowing a party who fails to follow the statutory scheme to recover its position via a second adjudication. The Employer in this case will now have to start court proceedings in order to recover the sums due to it. This case emphasises once more the importance of serving pay less notices, and serving them on time, if you do not intend to pay under a construction contract.