Greencoat engaged WE to carry out the mechanical services installation as part of substantial fi tting out works at existing office accommodation. The sub-contract incorporated the JCT SBCSub/A 2005 Standard Building Sub-Contract Agreement Revision 2 2009 terms. Provision was made for WE to apply for payment on the second to last Friday of each month and for Greencoat to issue a payment certifi cate within one week thereafter; the fi nal date for payment was to be 45 days after receipt of an invoice by WE. WE submitted Application No 10 for payment for a net sum of £488k. This included breakdowns as to how that fi gure was reached. Greencoat certifi ed that a net sum of only £16.6k was due, again providing breakdowns against various heads of work done, variations and withheld items. Under the sub-contract, payment was due by 14 January 2012 On 8 December 2011, WE’s consultants confi rmed that they did not accept Greencoat’s assessment. They started adjudication proceedings 6 days later.
Greencoat said that the adjudicator eff ectively had no jurisdiction on the basis that no or no material dispute had crystallised because the date for payment had not yet accrued, and because relief for payment was sought which the adjudicator could not award because the obligation to pay had not arisen. The adjudicator replied saying “I also doubt that the fact that payment is not yet due is a good point”.
The Judge agreed saying that it was clear that there was a dispute as to whether £488k or some other sum was due. The Judge noted that it would be illogical to say that there cannot be a dispute about an interim valuation of work unless, until and after the valuation falls due for payment. The fact is that here there was a dispute about the interim valuation and that dispute was referable to adjudication. Any dispute would cover the items put forward for withholding, as eff ectively Greencoat was arguing that the items and quantum then claimed could and should be deducted, whilst WE was arguing that they could and should not be deducted.
There were however two items totalling approximately £25k which were not part of or within the confi nes of the dispute as they had not been mentioned before they emerged 22 days into the adjudication process. The Judge was of the view that, he was able to sever that part of the decision where the adjudicator did not have jurisdiction and reduce the total sum due accordingly. To act in this way was entirely consistent with the principles set out in the Cantillon v Urvasco decision where Mr Justice Akenhead himself had noted that:
- If the decision properly addresses more than one dispute or diff erence, a successful jurisdictional challenge on that part of the decision which deals with one such dispute or diff erence will not undermine the validity and enforceability of that part of the decision which deals with the other(s).
- The same in logic must apply to the case where there is a noncompliance with the rules of natural justice which only aff ects the disposal of one dispute or diff erence.
So far as costs were concerned, the Judge decided that WE had succeeded, substantially, having recovered just over 90% of its claim. Whilst there was substantial argument in relation to jurisdiction and Greencoat had won some of these arguments, this was not a case for reducing by percentage the overall entitlement to costs.