Making up the rules

I am much obliged to Andrew Williamson from the Manchester office of solicitor Pannone & Partners. He has sent me a useful decision on an adjudication enforcement in the High Court.

It is Tim Butler Contractors Ltd vs Merewood Homes Ltd; call it No 27 in our series.

In this case, the adjudicator had to decide whether a particular document was part of the contract. As the adjudicator is only empowered to decide questions under the contract, this raised questions about jurisdiction. Unless specifically agreed between the parties, the adjudicator has no power to decide what his or her own jurisdiction is, and if both sides say he doesn’t have jurisdiction, he leaves. But if one side says he has but the other side quarrels, then the poor old adjudicator has to decide for himself whether to stay or go. At the end of this page I will tell you how I deal with that problem as adjudicator.

Meanwhile, let me tell you the story in the Butler case. It is the everyday real-life stuff of the building industry. An ordinary contract arose by correspondence – nothing fancy; no standard forms of contract. The result was that Merewood placed an order for £26 118 worth of work. The builder replied indicating “payment via interims, 90% materials on site and 28-day payments, 5% retention and 2.25% released on completion of works.” Merewood said OK.

The work got under way. The builder put in an application for payment and was paid. This was the honeymoon period. Then a second application was made, but wasn’t paid. The builder called for a referee.

Merewood, as employer, argued that since the contract period was specified or agreed in the contract as three weeks, there was no entitlement to interim account payments. The reason is that section 109 of the Construction Act sets 45 days as the minimum duration to qualify for interims. The builder said that would be right if and only if a three-week period was specified in the contract.

If the jurisdiction point is arguable, awkward, debatable, then I do not trouble to dig or delve; I press on …

The adjudicator decided that the parties were only agreed on price, and date of commencement. He said: “The documents do not evidence agreement in the duration of the works.” In other words, he couldn’t find express agreement to a work period of fewer than 45 days.

Now then, whether that decision is wrong or right is irrelevant if the adjudicator has power to decide that question, since a right or wrong answer still binds the parties pro-tem. But it was argued by Merewood’s barrister that the adjudicator was trying to fathom what an act of parliament meant in order to decide whether he had jurisdiction. This was not a dispute under the contract; rather, it was a dispute about whether the term was or was not under the contract. Do you see the subtle difference? This is the cup final referee replying to the goalie who’s just asked him to decide if a particular rule exists.

Mr Justice Gilliland decided in this case that a question as to whether a term existed for interim payments is a dispute as to the terms of the contract and the adjudicator has power to decide such a question. Deciding what terms are contained within a contract and in particular whether a programme was a term is the adjudicator’s ordinary business. That is quite different from a question as to whether a construction contract came into existence at all. The adjudicator has no power to bind for that. In short, the adjudicator had power and jurisdiction to decide about the programme, and his decision was binding.

Note carefully that Merewood was resisting the enforcement of the adjudicator’s decision. What it did not seek was a declaration from the court as to whether interim payments were a term of the contract. If it had done and had a decision in its favour on this short point, it would have trumped the adjudicator’s decision.

I promised to come back to issues of jurisdictional challenges. It frequently happens that the parties disagree about whether an adjudicator is competent to make a decision. I approach this by asking myself if the challenge is plainly right; repeat, plainly. If so, get off the pitch. But if the jurisdiction point is arguable, awkward, debatable, then I do not trouble to dig or delve; I press on. I leave such arguable jurisdiction point to the enforcement stage.