Legal commentary: Much ado about disputes
As regular readers of these pages will know, until relatively recently, adjudication was plagued by "no dispute" arguments. It seemed that hardly a week would go by without a new court case in which a party argued that the adjudicator lacked jurisdiction to make a decision because the claim referred to him had not crystallised into a dispute at the time the adjudication began - the adjudicator only being able to decide a dispute. When this defence worked it rendered any decision on the merits of the claim void and the adjudication a complete waste of time and money.
The defence was criticised by many as legalistic. Respondents to claims delayed answering them, or asked for further details to try to defer a dispute crystallising. The responding party might then say that no dispute existed at the time adjudication started while (and not inconsistently) fighting the claim tooth and nail.
A search of our database of more than 250 adjudication case summaries reveals a significant drop in no dispute cases since the courts finally clarified when a dispute crystallises in late 2004. However, a case last month saw the attempted resurrection of the no dispute defence.
In one of his first judgments since becoming a High Court Judge in the specialist Technology and Construction Court, Mr Justice Akenhead followed the trend of recent authorities. His judgment in Ringway Infrastructure Services Ltd -vs- Vauxhall Motors Ltd adopts a commonsense application of the now-established case law on when a dispute crystallises.
In this case, a contractor referred to adjudication a dispute about its entitlement to payment under an amended JCT 1998 With Contractor's Design form. Its claim was based on an application for payment and the employer's failure to issue a payment notice. While section 110 of the Construction Act specifies no sanction for not giving a payment notice, the JCT 1998 WCD form does by requiring the amount applied for to be due (the equivalent form in the JCT 2005 suite also requires payment notices - which is critical for current purposes - but provides no sanction for their non-issue).
The adjudicator duly awarded the contractor the sum stated in the application for payment. The employer sought to resist enforcement of the adjudicator's decision, claiming that the adjudicator lacked jurisdiction because the referred dispute had not crystallised before the adjudication began. The court disagreed. The contractor's application for payment was a claim for payment in respect of the sum therein stated. That amount fell due immediately after the employer failed to give the payment notice. It did not matter that the contractor did not expressly raise a claim based on the lack of a payment notice before the adjudication. Such a claim was encompassed by the claim made under the application for payment.
The dispute arguably arose as early as when the payment notice was not given. However, the precise timing of when the dispute arose did not have to be decided because the value of the contractor's entitlement under the application for payment was clearly disputed before the adjudication by a (late) withholding notice.
Had the employer's argument succeeded, it would have placed an unwelcome additional hurdle in the way of a payee's right to adjudicate.
Despite the change of guard at the TCC, the judgment follows the existing policy of the courts to enforce adjudicators' decisions. The bottom line remains that when mounting a jurisdictional challenge you are always starting on the back foot.