A&D Maintenance and Construction Ltd v Pagehurst Construction Services Ltd [1999] 64 Con LR

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The right to adjudicate survives determination of the underlying contract. A challenge to jurisdiction should be raised at the outset.

HHJ Wilcox QC, Technology & Construction Court

23 June 1999

A was a sub-contractor to P, the main contractor, undertaking plumbing work at a school. No formal agreement was signed. A balance of A's invoices were not paid. P's contract was terminated, and it therefore terminated A's sub-contract on the basis of poor progress and defective work. Shortly afterwards, a fire broke out at the school, and the loss adjusters decided that this was due to defective installation of a boiler.

A issued a notice of adjudication claiming payment of its outstanding invoices. P asked the adjudicator to suspend proceedings, on the basis that the issues identified by A should not be decided in isolation from P's claims against A arising from the fire, and that adjudication was not the correct forum to decide this dispute. The adjudicator continued nevertheless. P participated in the process, and did not challenge the adjudicator (despite threats to do so) or seek a ruling on jurisdiction.

The adjudicator made a decision in favour of A, and A brought summary judgment proceedings to recover the sum awarded.

P argued that the right to adjudicate did not survive the determination of the contract. P challenged the adjudicator's jurisdiction to make any decision, arguing that the contract had come to an end (upon its termination) and that adjudication was for the resolution of minor disputes arising during the contract. The court held that this was incorrect. Section 108(2)(a) provides that the contract shall enable a party to give notice at any time of his intention to refer a dispute to adjudication. Therefore, even when the contract was terminated, the right to adjudicate remains, in much the same way as an arbitration clause (see Heyman v Darwins (1942) AC 356). Had Parliament intended the time within which adjudication could be sought to be ltd, it could have so provided.

P also argued that some of the invoices did not become payable under the timetable of the Scheme and should not form part of the adjudicator's decision. The court examined the powers given to the adjudicator under paragraphs 12-16 and 20 of the Scheme and held that the matters were within the competence of the adjudicator because of the wide powers conferred on him. Payments and matters of set-off or abatement were matters arising under the contract, and the correctness of the decision was not something to be considered by the court when considering the ltd issue of enforcement of the decision. If the court were to review the decision, given that the adjudicator had been properly appointed and was considering matters within his remit, it would go behind the intention that the decision be binding pending litigation, arbitration or agreement.

On this basis, the court decided that P had no reasonable prospect of successfully defending the claim, and summary judgment was given.

The right to adjudicate survives determination of the underlying contract. A challenge to jurisdiction should be raised at the outset. 

This summary was provided by CMS Cameron McKenna LLP.

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

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