Joinery Plus Ltd (in administration) v Laing Ltd [2003] HT 02/323

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A decision made by applying the wrong contractual terms may be made without jurisdiction. This is different from applying the wrong construction to contractual terms. If a party wishes to challenge the validity of a decision, it should not ask the adjudicator to correct it.

HHJ Thornton QC, Technology and Construction Court

15 January 2003

J was engaged as sub-contractor to L for two different projects. One project was under JCT Works contract standard terms ("Admiralty") and the other was under a heavily amended DOM/2 contract ("Metropole"). Adjudication under Admiralty was in accordance with the JCT rules; Metropole contained no adjudication provisions so the Scheme for Construction Contract applied. Both projects were contentious and J referred disputes to adjudication. The same adjudicator was appointed in respect of both contracts. J referred a claim in the Admiralty contract first; this was not the subject of this action.

J's claim in Metropole was found by the adjudicator to be a global claim. He ordered the parties to meet and prepare a schedule of delaying events and effects of those events. Some agreement was reached between the parties. After a meeting with the parties, the adjudicator awarded around £58,000 to J plus interest and VAT, substantially less than its claim of £700,000. However, the adjudicator's decision referred to terms of the JCT Works contract rather than DOM/2. He referred to certain terms that were not present in the DOM/2 contract and also to provisions of the JCT Adjudication rules that were not present in the Scheme.

J wrote to the RICS who had nominated the adjudicator and complained that he had not answered the question referred to him. In the meantime, L sent a cheque for the sum awarded to J. J banked the cheque and told L it was accepting it as a part payment on account, as the adjudicator had not answered the right question. The adjudicator said the errors had no effect on his decision, but offered to correct his award. Neither party asked him to do so. Subsequently (after a long delay caused by J going into administration), J applied for a declaration that the decision was not valid. L claimed that it was entitled to restitution of the monies paid by it.

The Court examined the adjudicator's decision and found that the decision had every appearance of having been decided by reference to the wrong conditions of contract. This was an error going to the heart of the adjudicator's jurisdiction and his decision could not stand. The error of the adjudicator in C&B Scene Concept Design v Isobars was different and went to the construction of contractual terms (although it was near the limit of an error of law within jurisdiction). The Court also noted that it was significant that J had not asked the adjudicator to correct the "errors"; had it done so, it would have accepted the validity of the decision.

On the facts, it was clear that J's acceptance of L's cheque did not amount to acceptance of the adjudicator's decision. J was entitled to commence a new adjudication in respect of the same facts before a different adjudicator.

L required leave of the Court to bring a claim for repayment of its cheque since J was in administration. It was for L to make out a case for leave and it was not able to do so. L had not made a mistake by making payment. It could only recover the money in restitution if there was a total failure of consideration. That was not the case as it had accepted that some money was due to J. Therefore, L was not entitled to repayment of its cheque.

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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