Working Environments Ltd -v- Greencoat Construction Ltd [2012] EWHC 1039 (TCC)

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Judgment date: 24.04.2012


(1) A dispute concerning an interim valuation can be commenced prior to the valuation falling due for payment;  (2) the Adjudicator had no jurisdiction to decide on two new items of claim that were only raised 22 days into the adjudication process and  (3) the Adjudicator’s decision in respect of these items  was severable.

Technology and Construction Court, Mr Justice Akenhead


Greencoat Construction Ltd (“Greencoat”) was the main contractor employed to carry out substantial fitting out works to an office building.  Greencoat engaged Working Environments Ltd (“WE”) under a sub-contract to carry out the mechanical services installation for the project.  The sub-contract contained an adjudication clause which incorporated the statutory Scheme.  Payment provisions in the sub-contract provided that WE would apply for payment on the second to last Friday of the month, that Greencoat would issue a payment certificate one week thereafter, and that the final date for payment would be within 45 days of Greencoat receiving WE’s invoice.

On 24 November 2011, WE issued Application No. 10 claiming a net sum of £488,153.45.  In response, on 2 December 2011, Greencoat issued a “Payment Certificate and Notice of Withholding Payment” (the “Certificate”) certifying a net sum of £16,686.36.  A breakdown provided by Greencoat in this document showed reductions of about £32k and £370k from sums claimed in respect of measured work and variations, and a set off comprising nine individual items totalling about £62k plus liquidated damages against which the amount was “tbc”.  Applying the time limit in the sub-contract, the final date for payment was 14 January 2012.

On 8 December 2011 WE disputed the Certificate and on 14 December 2011 commenced adjudication proceedings.  WE asserted that Greencoat had unjustifiably reduced the valuation of variations, had wrongly reduced the sum for measured works and had not provided sufficient detail to establish any entitlement to set off.

Greencoat responded by challenging the Adjudicator’s jurisdiction, alleging that no material dispute had crystallised as the final date for payment had not passed.  Without prejudice to that contention Greencoat sought to substantiate the amounts in the Certificate.  It provided a reiteration of the list of set offs in the Certificate showing relatively minor adjustments in the figures for the nine items and liquidated damages as still “tbc”.  In addition Greencoat appended to its response a withholding notice dated 5 January 2012 (the “Withholding Notice”) which listed the same nine items (albeit with slightly different figures against three of them), attributed an amount of £120k to liquidated damages and included two new items totalling approximately £24k.  Greencoat argued that the Withholding Notice could not form part of the dispute as it was issued after the dispute was referred to adjudication.   
The Adjudicator concluded that the dispute arose on 2 December 2011 and had crystallised by 14 December 2011.  Accordingly, WE was entitled to adjudicate notwithstanding the fact that the date of payment had not yet arisen.  He further held that he should address the liquidated damages and the two new items in the Withholding Notice because the scope of the adjudication was “not only what sums are due on 14 January 2012 via Works done and variations but is about intended set off”.

After corrections were made under the slip rule, the Adjudicator found that the sum due to WE on 14 January 2012 was £250,860 plus VAT and ordered Greencoat to pay 65% of his fees.


The Court was asked to address the following issues:  

  • Whether a dispute had crystallised at the time of the notice for adjudication.
  • Whether the Adjudicator had jurisdiction to deal with all the items listed on the Withholding Notice or just the items which had also been listed in the Certificate.


The Court held that:  

  • There was a clear dispute as to quantum illustrated by the rejection by Greencoat of WE’s Application No. 10 and WE’s subsequent dissatisfaction.  It would be illogical to state that there cannot be a dispute concerning an interim valuation unless, until and after the valuation falls due for payment.  Further, the Court commented that there would be a practical advantage in seeking adjudication before the due date for payment so the dispute can be resolved before payment is due or shortly thereafter.
  • If a defending party has not prior to the adjudication and does not put forward a particular defence, the adjudicator does not have jurisdiction to address such a defence even if it seems a sensible thing to do to save time and cost later. However, if the crystallised dispute referred to adjudication encompasses a particular defence, the defending party can not withdraw that defence during the adjudication to fight another day, so to speak, on that particular defence.
  • Accordingly, the first nine items in the Certificate fell within the dispute.  It was open to the parties within reason to adjust the quantum of disputed items.  The fact that they were re-quantified in part in the Withholding Notice did not take them out of the ambit of the referred dispute.
  • The item claiming liquidated damages was also included in the dispute as it was clear that these formed part of Greencoat’s set off.  What Greencoat was doing in the Withholding Notice was confirming what liquidated damages it was proposing to set off against the sums otherwise due to WE, this having been presaged over a month before. Greencoat could not withdraw the issues relating to liquidated damages as they were part of the crystallised dispute referred to adjudication.
  • However, the two new items in the Withholding Notice were not part of the crystallised dispute and were only raised 22 days into the adjudication process, therefore the Adjudicator did not have jurisdiction to consider these items.  
  • The Adjudicator’s decision was severable in accordance with the decision in Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC). 
  • Greencoat was required to comply with the decision of the Adjudicator by paying all such amounts as were within the jurisdiction of the Adjudicator to decide.  It followed that Greencoat was required to pay the amount declared by the Adjudicator less the value of the two new items (plus VAT and 65% of the Adjudicator’s fee). 

This summary was provided by CMS Cameron McKenna LLP.

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