AMD Environmental Ltd v Cumberland Construction Company Ltd

[2016] EWHC 285 (TCC)

In this adjudication enforcement case, two issues arose.  The first was the alleged absence of a crystallised dispute at the time of the notice of adjudication, the second the failure of the adjudicator to address the matters at issue. The adjudicator rejected the “no dispute” point, noting that there had been a five-month gap between the application for payment on 31 March 2015, and the notice of adjudication on 2 September 2015. Mr Justice Coulson agreed, noting that he had observed before that “this argument is frequently advanced and almost as frequently rejected by the courts”.

Cumberland said that they had been asking for particulars of parts of AMD’s claim which were not always forthcoming. Mr Justice Coulson said that he considered that it was “wrong in principle” to suggest that a dispute had not arisen until every last particular of every last element of the claim had been provided:

“When a contractor or a sub-contractor makes a claim, it is for the paying party to evaluate that claim promptly, and form a view as to its likely valuation, whatever points may arise as to particularisation. Efforts to acquire further particularisation should proceed in tandem with that valuation process ... In an ordinary case, a paying party cannot put off paying up on a claim forever by repeatedly requesting further information … Any other conclusion would allow a paying party limitless time, either to avoid an adjudication altogether, or at least to avoid the enforcement of any adverse decision. It would deprive the payee of its statutory right to adjudicate.”

The Judge also noted that Cumberland replied to the adjudicator’s ruling on 17 September 2015, that there was a crystallised dispute, by requesting that same day an extension of time to serve its response. Cumberland wrote again, expressly acknowledging the adjudicator’s decision “to overrule our barrister’s objections to an adjudication”. There was no reference in either letter to any reservation of the right to challenge the decision subsequently on this same ground. Cumberland had therefore accepted the adjudicator’s ruling and were treating him as having the necessary jurisdiction to proceed.

Cumberland also suggested that the adjudicator’s request for further information, and AMD’s compliance with that request, constituted a breach of natural justice. The Judge rejected the submission that it was somehow unfair if the adjudicator was given information during the adjudication which had not previously been available (whether or not it had been previously requested). If an adjudicator asks for more information, it was “obviously wise” for the claiming party to provide that information, regardless of their own view as to its materiality. It would be contrary to the Scheme for Construction Contracts and the basic principles of adjudication not to allow the adjudicator a wide leeway to seek information that they believed to be important.

AMD sought interest at 8.5% pursuant to the Late Payment of Commercial Debts (Interest) Act 1998. Cumberland suggested 2.5%. The Judge decided that the right figure was 6%:

“That is because this adjudication decision should have been honoured some time ago, and the arguments in support of the defendant’s position were properly categorised as hopeless. The TCC is concerned that too many adjudication decisions are not being complied with, and that there are too many disputed enforcements where the grounds of challenge are without merit. Thus a high interest rate under the Act will be awarded in such cases.”

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