Adjudication
A&D Maintenance and Construction Ltd v Pagehurst Construction Services Ltd (June 99) TCC

A&D was a subcontractor carrying out building works on a school for Pagehurst as main contractor. The main contract was determined and on the same day Pagehurst purported to determine the subcontract. Adjudication was commenced by A&D and a decision given in its favour for the payment of A&D’s outstanding invoices. Pagehurst failed to comply with the Adjudicator’s decision and A&D applied for summary judgment under Court Procedure Rule 24.

It was held that if the subcontract was terminated that the matters referred to the adjudicator remained disputes under the contract. The adjudication provisions remained operative in the same way as an arbitration clause remained operative by analogy with the decision in Heyman v Darwin (1942). Whereas Parliament had provided precise time limits for the appointment of adjudicators and the timetable for the process, there were no such limits on the time when a party could give notice of an intention to refer a matter to adjudication. Section 108(1) of the Act allowed a party to refer a matter at any time and the position with regard to arbitration was clearly in the minds of the legislators when Section 108 was enacted.

Pagehurst then argued that certain of the invoices raised by A&D did not become payable and should not form part of the Adjudicator’s decision. In addition Pagehurst had consistently taken the position in the adjudication that it was not appropriate for the issue referred to adjudication to be decided in isolation of Pagehurst's claims for losses allegedly caused by A&D. Although Pagehurst had threatened to challenge the Adjudicator they did not do so, but had instead participated in the Adjudication. They could have sought an immediate ruling by the Adjudicator as to his jurisdiction which could have been the subject of an immediate challenge. They did not do so.

It was held that the Scheme for Construction Contracts applied and by paragraph 20 of the Scheme the Adjudicator had the power to deal with matters such as set-off or abatement and the types of issues raised by Pagehurst. The Court would not review the Adjudicator’s decision. The correctness of the Adjudicator’s decision was not a matter to be considered in deciding whether the decision was enforceable. Matters of abatement and claims for damages for breach of contract could have been canvassed before the Adjudicator, and it seems they were, but they were matters to be dealt with in subsequent arbitration proceedings or legal proceedings or by agreement. Reference was made to the decision in Outwing Construction Ltd v H Randell & Son Ltd (1999) TCC in which it was held that the decision of the Adjudicator has to be complied with, pending final determination. There was no provision for a "stay of execution".

The Court therefore gave judgment for A&D for the full amount with costs.

The decision makes clear that any objection to jurisdiction must be given at the earliest stage of the Adjudication proceedings since otherwise a party will be treated as having submitted to the process. In The Project Consultancy Group v The Trustees of the Gray Trust (July 1999) TCC it was held that this was a matter of fact. In that case the defendants had stated at the beginning that the Notice of Reference to Adjudication was invalid and that if the adjudication continued they would dispute the Adjudicator’s jurisdiction and put these issues before the Court in any enforcement proceedings. They continued to refer to the issue of jurisdiction in all communications.