Morrison’s ripe banana

First, let me say thank you to Ann Glacki of Bliss (Building Information Subscribers Service) for letting me have the full judgment so quickly.

Fastrack was the brickwork subcontractor on the Leisure World Complex in Coventry. Morrison was the main contractor in a joint venture with Imreglio. The subcontract document is Morrison’s in-house jobby; the programme was 20 weeks of bricklaying to be done by 30 December 1998. Serious delays are said to have arisen; Morrison issued a revised end date of 31 March 1999. Fastrack said no. So, Morrison said it would take part of the work away and give it to others.

No way, said Fastrack. Morrison sensibly paused here but eventually brought some other people in. At that, Fastrack dumped the job completely, saying that Morrison had “repudiated” the contract. Morrison clocked up a bill for £226 000 and asked Fastrack to pay up. An adjudication started. Fastrack got £35 000. Buoyed-up, it came for more adjudication.

This time, a different referee gave it another £120 601. Morrison wouldn’t pay a bean of that. Fastrack has now gone bust. So, the liquidator came to court to enforce the referee’s decision.

Now then, an adjudicated decision is binding.

A claim submission or notice is not a dispute; it has to ripen, rather like a banana goes from green to yellow

A court would oblige Morrison to honour the award – unless Morrison could show that the referee had no jurisdiction to determine the so-called dispute because it wasn’t yet a dispute. This all goes back to the act that allows adjudication. The act says that “a party has the right to refer a dispute”. Morrison said no dispute had arisen at the date of notice to call for an adjudicator. Also, it said the adjudicator had no power to decide his own jurisdiction.

The judge was clear. Only a dispute could be referred. If there are two or more disputes, they shall be the subject of separate referrals. This allows the appointing body to decide the type of adjudicator for each type of dispute. There could be different adjudicators. And any dispute referred cannot then be substantially altered. You cannot tag on extra gripes and claim that it is more or less the same. But sometimes the adjudicator is empowered – for example, by the Scheme for Construction Contracts – to enlarge the scope of the dispute.

So, had a dispute arisen? Well, you are in dispute once someone has brought to your attention the subject matter, if not precise details, of a gripe. Also, there must be time for you to consider, then admit, modify or reject a claim or assertion. If you are silent in the face of a claim against you, then a dispute will be deemed to arise after a short but reasonable time. A refusal to consider a claim or answer it constitutes a dispute. So, a claim submission or notice is not a dispute; it has to ripen, rather like a banana goes from green to yellow. Only yellow bananas can be waved at a referee.

And, if one party claims no dispute has arisen, yet the referee has already arrived, then what? First, the parties can expressly empower the referee to decide if a dispute has indeed arisen. Alternatively, a party could scurry along to a court or arbitrator to seek a declaration of no dispute and therefore no jurisdiction. The Technology and Construction Court will do this within days. Arbitrators are the same. Alternatively, the challenging party can play adjudicators while making it clear it thinks the referee has no jurisdiction, then argue at enforcement stage – which is what Morrison did.

And what happened to Morrison’s argument that there was no dispute? Oh, the banana had gone yellow. It was a ripened dispute. Indeed, it had already ripened by the first adjudication, but that one was limited to other matters. Fastrack waited for that one to finish, then came again with the other disputes. (This worried the judge a tad; in passing, he wondered if that was contrary to court practice of putting all bananas in the same basket.)