Background
This action concerned an application for summary judgement by LJH in relation to enforcement of four decisions made by adjudicators across three separate construction contracts with Meeres. The parties disputed the Final Account and sought adjudication as a result. The adjudication went in LJH’s favour and Meeres was ordered to pay a six-figure sum in addition to the adjudicator’s costs.
The application related to only one of the decisions concerning the Westfield project. The adjudicator had determined the value of LJH’s works following its Final Payment Claim. Meeres had resisted the Adjudication decision on the basis that a dispute had not crystallised and the existence of multiple contracts.
Crystallisation defence
Meeres’ position was that the dispute had not crystallised when the Notice of Intention to Refer a Dispute to Adjudication was issued, on the basis that sufficient information was not provided by LJH. This, they said, made the Adjudication decision invalid as the adjudicator lacked jurisdiction.
LJH dispute this position and claimed that, as Meeres did not advance the jurisdiction defence before the adjudicator, they waived their claim to rely upon this in Court.
The Court provided an overview of the crystallisation of disputes as they relate to this matter:
- The starting point is that a dispute can only arise once the subject matter of the claim has been brought to the attention of the other party and they have had an opportunity to respond to it; and
- If the claim presented by the claimant is ‘nebulous and ill-defined’, to the extent that the respondent cannot sensibly respond to it, it is unlikely that a dispute can arise.
Meeres’ defence relied upon the claim being ‘nebulous and ill-defined’.
The Court held, however, that the claims in this case were far from ill-defined, as it was clear that the requests made were well understood by the parties. Whilst Meere was entitled to ask for supporting evidence of the basis for the claim, it was not entitled to claim that there was no dispute at all in the absence of this evidence. Rather, the additional evidence should have been provided concurrently with the adjudication proceedings. The court also held that there had, in any event, been a clear rejection of the claim.
The Court then went further and stated that even if that had not been the case, Meeres' defence would have been rejected on the basis that the specific defence of crystallisation had not been raised within the adjudication. Although Meeres did make jurisdiction challenges in a letter to the adjudicator, it did not do so on the grounds that no dispute had crystallised due to insufficient substantiation. Their jurisdictional challenges were made on a contractual point and were therefore irrelevant in this matter. They could not therefore rely on that ground of challenge in subsequent enforcement proceedings.
Multiple contracts defence
Meeres’ second position was that the Westfield Final Account contained a sum for works that were carried out on a different site, and under a different contract. They claimed this was a defence against part of the claim, which could not be severed and therefore meant that LJH was not entitled to summary judgement.
LJH disputed this position and claimed once again that Meeres had not made a jurisdiction challenge on this issue during the adjudication and, even if the adjudicator did not have jurisdiction, the sum could still be severed and a decision made by the Court with regards to the remaining amount.
The Court held that Meeres had an arguable point with regards to the multiple contracts, specifically that the adjudication decision considered disputes under two different contracts. However, that was not a jurisdictional defence. If the adjudicator was incorrect in taking a sum from a different contract into account, it was a substantive rather than a jurisdictional issue. Severance was therefore not an issue.
The Court went on to say, however, that even if the adjudicator was shown to not have jurisdiction over the additional sum, the Court would have been able to deduct the sum from the amount ordered to be paid by the adjudicator. The sum identified made up less than 2% of the total amount awarded and should not be used to undermine the enforceability of the award as a whole.
Commentary
The High Court has issued a reminder in this case of its views on a number of important issues concerning the conduct of adjudications and the enforcement of adjudicator’s decisions, specifically in relation to the crystallisation of disputes, adjudications involving multiple contracts, the need to make jurisdictional challenges during an adjudication and severance of defective parts of a decision. Failure to keep these in mind may lead to defensive claims fizzling out…
This article was co-written by Chris Murphy, a Trainee Solicitor within our Construction team.
