Allen Wilson Shopfitters v Buckingham [2005] EWHC 1165 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

Technology and Construction Court, London

His Honour Judge Peter Coulson QC

27 May 2005

An adjudicator's jurisdiction either arises from express terms in the contract or, if there is a construction contract in, or evidenced in, writing, which contains no express adjudication provisions and is not otherwise excluded from the Act, then the provisions in the Act and the Scheme will apply.

During 2004 and January 2005 the Claimant, Allen Wilson, carried out extensive building work at Mr Buckingham's property. The contractual basis on which the work was done was in dispute. The Defendant had originally engaged a firm of quantity surveyors, Deacon & Jones ("Deacons"), to manage the works and act as contract administrators however, on 3 January 2005 their engagement was terminated. Mr Buckingham told Allen Wilson that he would be taking over the administration of the contract himself.

A dispute arose between the parties arising out of Valuations 12 and 13. In the absence of Deacons, Allen Wilson prepared and issued Valuation 12, in the sum of £80,729.14, to Mr Buckingham on 7 January 2005. Mr Buckingham paid a substantial part of this valuation but left £17,757.14 unpaid. On 25 January Allen Wilson prepared and issued Valuation 13 in the sum of £32,644.21 but Mr Buckingham did not pay anything against this valuation. Other than the part payment against Valuation 12, Mr Buckingham provided no detailed response to either Valuation.

On 1 February Allen Wilson suspended their works on the grounds of non-payment and on 8 March issued a Notice of Adjudication in which the sum of £50,401.35 (the unpaid parts of Valuations 12 and 13) was claimed. The dispute was referred to an adjudicator.

Mr Buckingham's Response to the Referral Notice did not provide any defence on the merits of the two Valuations. Instead it was expressly limited to challenging the adjudicator's jurisdiction. Mr Buckingham argued that, as there was no written contract in respect of the works that were the subject matter of the adjudication, as the contract had been terminated, and as the works concerned the refurbishment of a dwelling house and were therefore excluded from the 1996 Act, the adjudicator did not have jurisdiction to determine the dispute. Mr Buckingham also argued that, if it was found that there was an agreement to adjudicate, then this would be contrary to the Unfair Terms in Consumer Contracts Regulations 1999.

The adjudicator rejected each of these arguments and awarded Allen Wilson the sum of £50,401.35 together with interest and certain other fees. Mr Buckingham refused to pay and Allen Wilson commenced proceedings for the enforcement of the award. In the enforcement proceedings, Mr Buckingham relied upon the same jurisdictional arguments put to the adjudicator and, although he made a cross-claim in respect of defective work, delay and sums paid direct to Allen Wilson's subcontractors, there was no withholding notice and no pleaded counterclaim in this regard. Although Mr Buckingham intimated during the adjudication that he was in the process of commencing proceedings in respect of his counterclaim, no such proceedings had been issued at the date of the enforcement hearing.

The Court first considered whether the contract between the parties conferred jurisdiction on the adjudicator. Deacons, on behalf of Mr Buckingham, issued the first letter of intent dated 21 July 2004 that provided, inter alia, that the works were to be carried out under the terms and conditions of the JCT Private Without Quantities, 1998 Edition. That standard form of contract incorporated a detailed set of adjudication provisions and allowed the architect or supervising officer (who, until 3 January 2005, had been Deacons) to instruct variations and additional works on behalf of Mr Buckingham. The first letter of intent was signed and returned to Mr Buckingham however Deacons never prepared any formal contract documents. The Court held that, pursuant to the first letter of intent there was a contract, evidenced in writing, between the parties. As the dispute arose out of Valuations 12 and 13 for work that, although not within the original scope of the first Letter of Intent, had been instructed under Clause 13 of the JCT 1998 Edition, which was incorporated into the contract by reference in the first letter of intent, that dispute was referable to adjudication under the adjudication provisions of the JCT 1998 form.

The Court also considered the second letter of intent, issued by Deacons on 8 November 2004 and held that, as Allen Wilson had deliberately not signed that letter, it had no contractual significance.

The Court then turned to arguments raised in the adjudication concerning the payment machinery: in the absence of Deacons, Allen Wilson were unclear as to how they could claim their perceived financial entitlement arising from Valuations 12 and 13. In the Referral, therefore, Allen Wilson put its claim by reference to the payment provisions of the Scheme and Mr Buckingham immediately objected stating that, since he was a residential occupier, the 1996 Act could not apply and the adjudicator therefore had no jurisdiction to determine the dispute. The Court disagreed with Mr Buckingham. The Court held that the adjudicator derived his jurisdiction from the contract and the Notice of Adjudication. The judge then considered the status of Valuations 12 and 13 and concluded that sums were payable pursuant to those Valuations. The Court held that the adjudicator's analysis of the status of the two Valuations was a matter for the adjudicator, within his jurisdiction, and it was not open to the Court to consider the correctness of that decision.

The Court also held that the contract continued to govern any disputes as to valuation and payment arising out of Valuations 12 and 13, notwithstanding the termination of Deacons' employment, as the contract continued to operate in practice, albeit slightly adapted in practice (Mr Buckingham advised that he would deal with payments and indeed paid sums pursuant to Valuation 12). Further, Mr Buckingham would, in any event, would not be able to rely on the residential occupier exemption in the Act as, in failing to replace Deacons, Mr Buckingham was in breach of contract and to find that the contract payment machinery was unworkable would enable Mr Buckingham to take advantage of his own breach.

The Court also held that Mr Buckingham's argument that the contract had terminated was a bad one: the contract may have come to an end but the parties' accrued rights and liabilities under that contract remained for the adjudicator to determine.

Finally, the Court rejected, as a matter of principle, Mr Buckingham's claim that the adjudication provisions should be struck out as offending against the Unfair Terms in Consumer Contract Regulations 1999 and held that the present case was on all fours with Westminster Building Company Limited v Beckingham 2004. The Court found that it was a highly material fact that it was Mr Buckingham's agents, Deacons, who had proffered the contract terms that contained adjudication provisions.

The Court therefore concluded that the Adjudicator did have the necessary jurisdiction to reach the decision he did and granted summary judgment for Allen Wilson.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

Click here to read full-screen | Click here to print the case