Same dispute
By Victoria Russell, Fenwick Elliott
Brown and Another v Complete Building Solutions Ltd [2016] EWCA Civ 1 (Court of Appeal – 13 January 2016)
This was an appeal against summary judgment enforcing an adjudicator’s decision. Mr & Mrs Brown (the “Employer”) argued that an adjudicator had no jurisdiction because he had been asked to adjudicate the same or substantially the same dispute as had been decided by another adjudicator in an earlier adjudication. The contractor contended, as the Judge had found in the Technology & Construction Court, that the adjudicator did have jurisdiction.
The employer had engaged the contractor under a JCT Minor Works Building Contract (2011 Edition) to demolish a dwelling house and build a new one. The architect certified practical completion and subsequently issued a Certificate of Making Good Defects and a Final Certificate. The contractor sent a letter to the employer, claiming a final payment of £115,450. This sum was not paid and the contractor duly served a Notice of Adjudication. The first adjudicator was then appointed by the nominating body.
He issued his Decision in April 2014, concluding that, as was common ground, the Final Certificate was ineffective. However, he also found that the contractor’s letter claiming the final payment was not a valid payment notice for the purposes of clause 4.8.4.1 of the contract. His reasons for reaching this conclusion were (a) it was based on the Final Certificate being issued late, whereas it was in fact invalid, and (b) the terms of the contractor’s letter did not comply with clause 4.8.4.1 in view of the way it was expressed – it did not make clear that it was a Notice and that it was issued pursuant to that clause. He found that, since no payment notice had been served, no sum was payable.
The contractor immediately sent a new payment notice and, some three weeks later, issued another Notice of Adjudication. An adjudicator was subsequently appointed. The employer disputed his jurisdiction on the grounds that the dispute referred to him was the same, or substantially the same, as that decided by the first adjudicator. The employer therefore refused to participate in the adjudication and did not serve a counter notice, which it was entitled to do under clause 4.8.4.3, and in the absence of which it was obliged to pay the contractor the sum stated in the contractor’s notice.
The second adjudicator issued his decision, finding that the dispute which had been referred to him was not the same, or substantially the same, as that which had been referred to the first adjudicator. The second adjudicator found that the first adjudicator had decided that no Final Certificate had been issued in accordance with the contract and that that decision was binding on both the parties and him. He also decided, however, that the contractor’s latest payment notice was effective, and that the employer’s refusal to make payment had created a dispute which was not the same or substantially the same as that which had been referred to and decided by the first adjudicator. Therefore, and in light of the fact that the employer had not served a counter notice, the second adjudicator decided that the employer was required to pay the £115,000 plus interest and the adjudicator’s fees.
The employer refused to pay this amount so the contractor began enforcement proceedings in the Technology & Construction Court where they obtained summary judgment. The employer appealed.
The Court of Appeal referred to the applicable principles as summarised by Mr Justice Coulson in Benfield Construction Ltd –v- Trudson (Hatton) Ltd [2008] EWHC 2333 (TCC) as well as the observations of Lord Justice Dyson in Quietfield Ltd –v- Vascroft Construction Ltd [2006] EWCA Civ 1737 and the recent decision of the Court of Appeal in Matthew Harding (trading as MJ Harding Contractors) –v- Paice and Springhall [2015] EWCA Civ 1281, citing Lord Justice Jackson in the latter case, when he said that:
“It is quite clear from the authorities that one does not look at the dispute or disputes referred to the first adjudicator in isolation. One must also look at what the first adjudicator actually decided. Ultimately it is what the first adjudicator decided which determines how much or how little remains available for consideration by the second adjudicator”.
The Court of Appeal reiterated that the “starting point is the Adjudicator’s view of whether one dispute is the same or substantially the same” as the other, this being “a question of fact and degree”.
The Court of Appeal found that the second adjudicator was entitled and correct to conclude that he was not considering the same or substantially the same dispute as the first adjudicator. He had recognised that both parties were bound by the first adjudicator’s original finding that the Final Certificate was ineffective and that the contractor’s letter seeking payment did not constitute a valid payment notice, and that he was being asked to decide whether a different notice, served some four months later, had different consequences. Whilst both adjudications were dependent on the ineffectiveness of the Final Certificate and were for the same sum, the contractor was not seeking re-determination of any matter which had already been decided by the first adjudicator. The contractor “was not making good a shortcoming in the earlier letter; it was approaching its claim via a new and different route, one which relied on the letter of 1 April and thereby raised a different dispute”.
The Court of Appeal concluded that “the analysis might have been different if the Respondent had tried in some way to cure a defect in the earlier Notice so as to rely on it, but that was not the position here. It was the new notice and only the new notice which founded the Respondent’s entitlement to be paid”. The appeal was therefore dismissed.