PT Building Services Ltd v ROK Build Limited

Case reference: 
[2008] EWHC 3434 (TCC)
Monday, 8 December 2008

Key terms: 
Jurisdiction - Serial adjudications - No dispute - s.107

ROK Build Limited ("ROK") engaged PT Building Services Limited ("PTB") to carry out work to kitchens and bathrooms in council-owned properties as part of the Harlow Decent Homes Project in Essex. A dispute arose as to ROK's failure to make payment on time, or at all.

PTB served a notice of adjudication on ROK for £376,224, along with a document entitled ‘Anticipated final account'. ROK stated that there wasn't a dispute and objected to PTB's proposed adjudicator. Following this, PTB served another notice of adjudication claiming £411,465.94, together with a document entitled ‘Final account'. PTB applied to the CIArb who subsequently nominated an adjudicator. Amongst other issues, ROK objected to the adjudicator's jurisdiction on the basis that there was no crystallised dispute. The adjudicator decided that there was a crystallised dispute and proceeded with the adjudication.

Throughout this adjudication ROK reserved its position as to the jurisdictional matters. The adjudicator dismissed ROK's challenges, and consequently decided that ROK owed PTB £314,242.18. ROK did not pay anything to PTB, but did pay the adjudicator's fees.

PTB were concerned to avoid any jurisdictional arguments in potential enforcement proceedings, and therefore issued a new notice of adjudication on substantially the same issue. Following the nomination of a new adjudicator, ROK wrote to him, explaining that they considered the subject matter of the new adjudication had been previously decided in the earlier adjudication, and that he should resign on this basis. After considering ROK and PTB's submissions the adjudicator agreed with ROK and resigned.

PTB sought to enforce the first adjudicator's decision at the TCC. A number of issues arose to be decided by the Court:
1 Was ROK entitled to contend that the first adjudicator's decision was not binding in the light of:
(a) ROK's objection to the commencement of the second adjudication?
(b) ROK's payment of the first adjudicator's fees?
2 Was there a contract in writing within the meaning of s.107 of the Act?
3 Was ROK entitled to resist enforcement on the basis that the claim included work outside the scope of the contract in writing?
4 Did the first adjudicator lack jurisdiction on the basis that the dispute referred to him had not crystallised? Alternatively, did the manner in which the dispute was referred amount to such a serious breach of the rules of natural justice that the decision should not be enforced?
5 Was there non-compliance with paragraph 7(2) of the Scheme so that there was not a valid adjudication? Alternatively, did any non-compliance amount to such a serious breach of the rules of natural justice that the decision should not be enforced?
6 Did the first adjudicator answer the wrong question so as to deprive the decision of any effect?

In finding for PTB, and enforcing the first adjudicator's decision, Mr Justice Ramsey held that:

1 ROK was not entitled to contend that the first decision was not binding, given that it had relied on the first decision being binding to oust the jurisdiction of the second adjudicator. ROK had, by its conduct, elected to treat the first adjudicator's decision as binding, and could not now argue the opposite. Further the Judge decided that the payment of the adjudicator's fees by ROK would, without evidence to the contrary, be taken as an inference that ROK were treating the decision as valid.
2 There was a contract in writing within the meaning of s.107 of the Act. The parties had made notes of a pre-contract meeting which outlined all the agreed terms. ROK had argued that as the work scope was not specifically stated within the notes, and was to be subject to further instructions it was not sufficiently defined, and therefore the material terms of the contract were not evidenced in writing. The Judge decided that the agreed contractual term was that the work scope would be subject to further instructions, and this term was evidenced in writing.
3 All the works performed by PTB were carried out pursuant to the subcontract as evidenced in writing. ROK had said that there were multiple subcontracts with PTB, and that the payments PTB were claiming related to more than one of these subcontracts. ROK submitted that as the Scheme applied, the adjudicator could not adjudicate on multiple disputes arising out of multiple contracts without the consent of all parties. The Judge decided that, as a matter of fact, the claim was one dispute under one subcontract.
4 A dispute had crystallised between PTB and ROK and consequently the adjudicator did not lack jurisdiction on this basis. PTB had served an initial notice of adjudication, and ROK responded suggesting there was no dispute but crucially stating that they thought PTB's valuation was grossly overstated. The Judge decided that this crystallised a dispute. The documents entitled ‘Final account' and ‘Anticipated final account' were both applications for payment, of a type, and the latter did not change the dispute. Any further information entered late by PTB, as contended by ROK, was responded to by ROK and the adjudicator accepted ROK's response.
5 There was a technical breach of paragraph 7(2) of the Scheme, in that PTB did not serve the relevant construction contract with the referral, it was served a day later. But this breach did not invalidate the adjudication nor did it breach the rules of natural justice.
6 The adjudicator had answered the correct question put to him. ROK had submitted that the adjudicator was only allowed to reach a decision on a final account basis, whereas he had actually decided what sum was due to PTB on an interim basis. However, PTB submitted, and with which the Judge agreed, that the adjudicator had been asked to decide whether there was non-payment of sums from ROK to PTB, and, if so, what were the size of the non-payments.

Key contact

Tel: +44 (0)20 7421 1986
Tel: +44 (0)20 7421 1986