Specialist Construction Law Solicitor Lawrence Pearce discusses a recent case, issued in the Technology and Construction Court for enforcement of an Adjudicator’s Decision.
The recent case of WRW Construction Ltd (“WWW”) v Datblygau Davies Developments Ltd (“DDD”) was a claim, issued in the Technology and Construction Court (“TCC”), for enforcement of an Adjudicator’s Decision.
What makes the case stand out from the high volume of Adjudication enforcement claims heard by the TCC is that, in this case, the Court decided to enforce a decision which it held the Adjudicator did not, in fact, have jurisdiction to make.
The parties entered into a contract incorporating the JCT Design and Build 2011 Conditions for WRW to carry out the design and build of nine properties in Twickenham. A number of disputes arose between the parties which resulted in three Adjudications.
The Adjudicator found, in the second Adjudication, that DDD had validly terminated the contract; DDD therefore commenced the third Adjudication to determine the value of the post-termination final account.
DDD’s Notice of Adjudication, included a statement that: “DDD is entitled to and claims payment from WRW of the sum of £3,345,790.40 (or such other sum as the adjudicator shall determined [sic] is owed by WRW)… DDD invites the adjudicator to determine the sums due and payable by WRW to DDD and to order payment of such sum by WRW to DDD.”
In its Response, WRW claimed that: “The proper valuation of the post-determination final account in accordance with Clause 8.7.4 of the contract leads to a position in which DDD is indebted to WRW. Whilst WRW accept that the adjudicator has no jurisdiction to order payment to be made to WRW, the adjudicator has been asked by DDD to value the post-terminational [sic] final account the adjudicator should conclude that the sum due and payable by WRW to DDD is -£695,035.63.”
On its strict wording, WRW’s Response only appeared to give the Adjudicator jurisdiction to decide the value of the final account and not to order DDD to make any payment back to WRW.
However, the Adjudicator in fact decided that the value of the final account was “…an amount due as a debt from DDD to WRW … in the sum of £568,597.32,” and “…that WRW shall pay to DDD the sum of -£568,597.32 (negative) within 7 days...”
When DDD did not pay, WRW issued enforcement proceedings in the TCC.
DDD resisted enforcement on the basis that there had been no valid order for payment made in the Adjudicator’s decision; a fourth Adjudication would be required to make such an order.
The recorder, Andrew Singer QC, accepted that the Adjudicator did not have jurisdiction to Order DDD to make payment to WRW. However, the need for a fourth Adjudication would have been a mere technicality. It would have served no practical purpose and would have put the parties to additional costs and caused further delay.
He therefore applied a far more pragmatic and commercial approach, holding that:
“In my judgement, there is no bar… to the court enforcing a temporarily binding valuation in an adjudication award by making an order for payment of the monies due as a result of that valuation. Indeed, in my judgement it would be contrary to principle and established authority for the court to effectively force a party who has the benefit of an award in its favour… to have to commence a further adjudication (to which there is no defence) for the purpose of obtaining an order for payment from the adjudicator, before returning to the court if necessary, for further enforcement proceedings.”
Of course, it is likely that a significant amount of legal argument as to the enforceability of the Adjudicator’s Decision (and the resulting costs) could have been avoided had WRW’s Response been drafted so as to give the Adjudicator jurisdiction to order DDD to make payment to it. Contractors who are contemplating Adjudication (or who are served with a Notice of Adjudication) can obtain specialist legal advice from Holmes & Hills team of Construction Law solicitors.