Witney Town Council v Beam Construction [2011] EWHC 2332 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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Judgment date: 12.09.2011

SUMMARY

(1) Where, on a proper analysis, there are two separate and distinct disputes, only one can be referred to one adjudicator unless the parties agree otherwise. Whether there are one or more disputes involves a consideration of the facts. If there is a clear link between two or more arguably separate claims or assertions that may well point to there being one dispute.  (2) In this case, there was in essence only a single dispute, that being the sum of money that the contractor was due under the contract. The various issues which the employer had attempted to classify as single disputes were, in fact, simply threads of the overall dispute. In other words the issues of the extension of time, the loss and expense, the value of the variations and whether practical completion had been achieved or not were all factors which determined the payment due to the contractor. As these issues were all related to this single question then they were part of the one dispute.

Technology and Construction Court, Mr Justice Akenhead.
 
BACKGROUND
 
In early 2010, Witney Town Council (“the Council”) engaged Beam Construction (Cheltenham) Ltd (“Beam”) to design and construct the new Madley Park Community Hall in Witney, Oxfordshire for the Contract Sum of £749,726. The contract provided that if a dispute or difference arose which either party wished to refer to adjudication, the Scheme for Construction Contracts would apply. The contract required the works to be complete by 7 November 2010; however, the works were late. Eventually, the Contract Administer awarded a three-week extension of time such that the new completion date would be 26 November 2010. On 6 January 2011, the Council took possession of the building so that it could be used in a public election. Beam argued that Practical Completion occurred at this point, but the Council claimed that whilst it did use the building, it was by arrangement and the works were given back to Beam to complete the works after the election. Beam submitted its draft final account on 21 January 2011 claiming a sum of £103,484.16. On 2 February 2011, the contract administrator issued certificate No 10. The amount of this certificate was said to be nil because the amount previously certified was greater. Beam submitted its final account on 2 March 2011 claiming a sum of £95,785.48. On 11 March 2011, the Council purported to terminate the contract on the basis that Beam was not proceeding regularly and diligently and on 23 March 2011 Beam arrived on site to find that the locks had been changed.

In April 2011 Beam served a Notice of Adjudication and Referral Notice which identified that a dispute had arisen and listed a number of questions to be decided by the Adjudicator. The Council made it clear that it considered that more than one dispute had been referred to the Adjudicator and that consequently he had no jurisdiction. The Adjudicator rejected this argument and the Council therefore reserved its position whilst continuing to take part in the adjudication. The Adjudicator found that there was a net sum due to Beam of £70,459. When the Council failed to pay, Beam commenced proceedings and applied for summary judgment to enforce the Adjudicator’s award. The Council issued proceedings for a declaration that the Adjudicator’s decision was not enforceable on the grounds that he had had no jurisdiction since more than one dispute had been referred to him. Both applications were heard at the same time. At the hearing, the Council argued that there were effectively four disputes referred: (1) the draft final account submitted by Beam on 21 January 2011; (2) the final account submitted by Beam on 2 March 2011; (3) a claim for interest on underpayment of retention; and (4) a claim for the payment of the whole retention based on repudiatory breach.

ISSUES

The Court was asked to decide the following issue:

  • Did the adjudicator have jurisdiction?

 DECISION

The Court held:

  • A dispute arises generally when and in circumstances in which a claim or assertion is made by one party and expressly or implicitly challenged or not accepted.
  • A dispute in existence at one time can in time metamorphose in to something different to that which it was originally.
  • A dispute can comprise a single issue or any number of issues within it. However, a dispute between parties does not necessarily comprise everything which is in issue between them at the time that one party initiates adjudication; put another way, everything in issue at that time does not necessarily comprise one dispute, although it may do so.
  • What a dispute in any given case is will be a question of fact albeit that the facts may require to be interpreted.
  • The Notice of Adjudication and the Referral Notice are not necessarily determinative of what the true dispute is or as to whether there is more than one dispute. One looks at them but also at the background facts.
  • Where on a proper analysis, there are two separate and distinct disputes, only one can be referred to one adjudicator unless the parties agree otherwise.
  • Whether there are one or more disputes again involves a consideration of the facts. It may well be that, if there is a clear link between two or more arguably separate claims or assertions that may well point to there being one dispute. A useful if not invariable rule of thumb is that, if disputed claim No 1 can not be decided without deciding all or part of disputed claim No 2 that establishes a clear link and points to there being only one dispute.
  • In the present case there was in reality only one dispute between the parties by the time of the Notice of Adjudication and only one dispute which was referred to adjudication. That dispute was as to what was due and owing to Beam. The questions raised in the adjudication were clearly linked to and encompassed within that one dispute.
  • The Adjudicator had jurisdiction to decide what he did decide and there would be judgment in favour of Beam, enforcing the decision of the Adjudicator.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-lawnow.com/adjudication

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