Here, the judge held that an adjudicator did have jurisdiction to determine a dispute which involved three separate payment applications.
The parties entered into an oral agreement for the provision of construction labour to the defendant. The contract was a construction contract and so the Housing Grants, Construction and Regeneration Act 1996 applied. However, there were no written adjudication provisions, meaning that the Scheme applied.
During the course of the contract, the claimant made various applications for payment and raised invoices for the amounts claimed. The payment applications were cumulative, with each application being for the full value of the work done, less the value of the previous payment applications. No payment notices or pay less notices were issued by the defendant in respect of any of these applications for payment, and payment of three of the invoices was outstanding. The total value of those outstanding invoices was £40,026 inclusive of VAT.
The claimant referred the matter of the three unpaid invoices to adjudication. Following the claimant’s referral, the defendant’s solicitor challenged the adjudicator’s jurisdiction in a letter stating:
“We do not consider that you have jurisdiction to consider this matter because the Referring Party had in fact referred three separate disputes to adjudication under one notice and referral…Each application, its validity, whether a pay less notice was issued and the sums due in terms of that application is a separate dispute”.
Following the submission of this letter, the defendant failed to participate in the adjudication any further.
It is settled law that an adjudicator does not have jurisdiction to adjudicate more than one dispute in a single adjudication, unless the parties agree otherwise. However, the claimant argued this was not the case here, as the dispute was whether the outstanding sum of £40,026 was due for payment. The validity of the individual invoices themselves were merely sub-issues. Further the claimant argued that there is no principle of law which provides that each payment application gives rise to a separate dispute, and instead relied on the guidance provided in Witney Town Council v Beam Construction (Cheltenham) Limited  as to whether a single dispute can involve multiple sub-issues.
The adjudicator considered the jurisdictional challenge and agreed with the claimant; that the only dispute which had been referred was whether the sum of £40,026 was due. In considering that dispute the adjudicator awarded the claimant the sum of £40,026, together with interest in the sum of £2,078.70 and directed the defendant to pay his fees.
The defendant failed to pay the award, leading the claimant to commence enforcement proceedings. The defendant resisted enforcement on the grounds of its jurisdictional challenge.
In considering the application, the judge found in favour of the claimant and granted summary judgment to enforce the adjudicator’s award. She held that it was clear from the authorities that one dispute can include numerous sub-issues which might be capable of being determined independently from each other, and that this is a question of fact, to be determined on a case by case basis. In this instance the judge found that there was a clear link between the payment applications and therefore only one dispute, with various sub-issues, had been referred to adjudication.
The judge also noted that if the defendant was correct, it would mean the parties would have been financially burdened and inconvenienced by numerous separate adjudications, all to recover what was a single balance claimed under a single contract. This would have been contrary to the “policy underlying the adjudication process of efficient, swift and cost-effective resolution of disputes on an interim basis”.
Whilst not new law, this case serves as a useful reminder of the importance of only referring one ‘dispute’ to adjudication, and what constitutes a dispute for the purposes of the Construction Act.
If you are planning to refer a dispute to adjudication which has various sub-issues, care must be taken when drafting the notice of adjudication, and referral, to establish a clear link between the sub-issues to make certain you are not in fact referring multiple disputes.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at November 2021.