In Tim Butler Contractors Ltd v Merewood Homes Ltd (2000) TCCthe issue was whether an adjudicators determination that the contract terms provided for interim payments, went to his jurisdiction or whether this was a matter properly to be decided by him.

The documents which gave rise to the contract were typical of many informal construction contracts. They started with a quotation in a letter dated 2^nd June 1998 followed by a second letter from Tim Butler which enclosed the programme of works. The programme was a bar chart showing work to commence on 27^th July and completion on the week of 16^th August 1998. The next relevant document was an order from Merewood dated 24^th July 1998 with various items specified in the order. It was clear that there was an agreement on price. The primary issue was whether under Section 109 (1)(a) and (b) of the Act, Tim Butler was entitled to interim payments.

Work started on 27^th July and Tim Butler made application for interim payments. Merewood paid on the first application but on two subsequent applications Merewood did not pay and did not give notice to withhold payment. Tim Butler gave notice to refer to Adjudication. The adjudicator decided that Merewood should pay Tim Butler the sum of £10,441.05 plus VAT within seven days together with costs and the adjudicators fees. Merewood paid the adjudicators fees but did not pay the remainder of the award.

There was no dispute that the contract was a construction contract under Section 104 of the Housing Grants Construction and Regeneration Act 1996. It was clear that the contract did not make provision for adjudication and the adjudication provisions of the Scheme therefore applied. The Adjudicator was appointed pursuant of the Scheme. The dispute referred to Adjudication was whether Tim Butler was entitled to be paid on two applications for payment.

Section 109 of the Act confers an entitlement to stage payments but only if the contract specifies that the duration of the works is to be less than 45 days or it is agreed between the parties that the duration is estimated to be less than 45 days. The Adjudicator decided that the contract documents did not evidence agreement on the duration of the work of less than 45 days.

Merewood submitted that the adjudicator had erred by misconstruing section 109 of the Act. The question of the proper construction of statute was a matter of jurisdiction, and that by making such an error the adjudicator was acting outwith the scope of his authority entrusted to him by Statue or contract. The issue therefore was whether Tim Butlers entitlement to stage payment went to the issue of jurisdiction.

It was held that the question as to whether a construction contract came into existence which entitled Tim Butler to stage payments was a dispute as to the terms of the contract and not a dispute which went to the jurisdiction of the adjudicator. The position was that the adjudicator had to decide what were contractually agreed terms and in particular whether the programme was a term of the contract. The adjudicator said it was not. The adjudicator arrived at this conclusion having regard to the documents before him. He considered the correspondence and in particular the acceptance by Merewood. It is clear that the programme was supplied but there was no express term referred to in the documents as to the period of works. All that appeared on the documents was that work was to commence on 27^th July 1998. The adjudicator took the view that the reference to the programme commencing on 27^th July did not incorporate this document and accordingly the provisions of the Scheme applied.

The question of terms of the contract was different to the question of whether they were within the powers of the adjudicator. It was held that this was a dispute where the adjudicator was asked to decide what where the terms of the contract. He made a decision and that was the end of the matter. The adjudicator may be right, he may be wrong, but it was within his jurisdiction. The 1996 Act made provision for adjudication in construction contracts. It provided in Section 109, terms of payment. Maybe the adjudicator was in error but it was held that this was an error not going to the limits of his power nor without a construction contract. The adjudicator may have got it wrong but his decision was still within his power and not outside his jurisdiction.

It was held that it was squarely before the adjudicator whether there were contract terms regarding payment. It was held that even if the adjudicator were wrong in interpreting Section 110, he was entitled to reach the conclusion as to the existence of the provision for stage payments. It was held that if Merewood had not served a notice then it is not open to Merewood to refuse payment. Merewood could not raise the matters it seeked to raise. It was held that a decision as to what are the contract terms, is within the adjudicators jurisdiction. Whether there is a right to interim payments must arise under the contract. Accordingly Tim Butler was entitled to enforcement of the decision of the adjudicator.