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Bell Building Limited (“Bell”) entered into a subcontract with TClarke Contracting Limited (“TCL”) pursuant to which Bell was to carry out works for the construction of a data centre in London.
On 20 April 2023, Bell issued their Interim Application No. 18 in the gross sum of £20,915,777.43 less retention of £627,473.36. The Due Date for payment of that application was 9 May 2023 and the Final Date for Payment was 19 June 2023. TCL issued a document titled Pay Less Notice 18 on 6 June 2023 which gave a notified sum of £710,120.61. On 21 June 2023, TCL paid the notified sum of £710,120.61 to Bell who accepted the same.
A dispute arose between the parties in respect of Payment Application No. 18. Bell argued that the Pay Less Notice was invalid and referred the dispute to adjudication. In its Notice of Adjudication and Referral, Bell stated it did not give the Adjudicator jurisdiction to decide the “true value” of the Payment Claim and sought payment of £1,443,981.51 which it argued was outstanding due to TCL’s breach of the subcontract payment provisions.
In his decision, the Adjudicator acknowledged this was a “smash and grab” adjudication that did not concern the true value of the works at the relevant time. The Adjudicator decided that the document issued by TCL on 6 June 2023 was not a valid Pay Less Notice.
In the adjudication, TCL challenged Bell’s calculation of the amount to be paid on the basis that it includes TCL’s payment regarding Application No. 19. The Adjudicator took this to mean he was only to deal with Application No. 18. TCL’s position in the adjudication was that the Adjudicator cannot consider a payment made under Application No.19 as that will be outside of his jurisdiction.
Following this logic, the Adjudicator states that taking into account the payment made by TCL under Application No.18, the outstanding amount remaining to be paid is the sum of £2,839,793.31 less £710,120.62. The Adjudicator therefore decided that TCL should pay £2,129,672.69.
TCL argued in the enforcement proceedings that the Adjudicator’s decision should not be enforced due for reasons of lack of jurisdiction and/or breach of natural justice. TCL submitted that the Adjudicator considered the “calculation” of the claim which was outside of his jurisdiction and he carried out a valuation exercise which was outside his jurisdiction and purported to award more than the sum claimed.
As to jurisdiction, the Judge referred to legal principles set out in the Judgment of Akenhead J In Cantillon Limited v Urvasco Limited [2008] EWHC 282 (TCC). Bell pointed out that although the dispute referred to the Adjudicator concerned the sum due under Application No. 18, Bell’s claim also included the common caveat giving the Adjudicator license to grant “such other relief as is necessary, just and equitable to resolve the dispute”.
As to natural justice, Mr Davis KC referred to the test defined by Akenhead J in Cantillon Limited v Urvasco Limited and concluded that the material relied upon by the Adjudicator to justify the sum he decided to order was put in by Bell in answer to a question from the Adjudicator. It was held that the Adjudicator did not go off on a frolic of his own. The Adjudicator’s decision was a product of responding to and accepting the case advanced by TCL. He did not carry out a valuation, he corrected arithmetic.
The Adjudicator reached the conclusion that he had been invited by TCL to ignore payments made under Application No. 19. TCL’s submissions therefore opened up the possibility of a different, greater assessment of the sum due than claimed. The Adjudicator was therefore acting within his jurisdiction to determine the sum due as he saw fit in response to the submissions made by TCL.
Mr Davis KC therefore found that Bell was entitled to summary judgment.
This case highlights the importance of thinking through submissions, despite the tight timescales often faced in adjudication. TCL’s submissions effectively led to an own goal in this case – opening up the possibility of a different, greater assessment of the sum due than claimed.