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Adjudication: Do underpayment and repudiatory breach constitute one dispute?

Citation: Witney Town Council v Beam Construction (Cheltenham) Limited [2011] EWHC 2332 TCC

Keywords: Adjudication, adjudicators, construction contracts, disputes, jurisdiction

The Facts

Part 8 proceedings were brought by Witney Town Council (WTC) to seek declarations that the adjudicator had no jurisdiction to adjudicate upon what is said to be a number of disputes referred to him for decision.  These proceedings were amalgamated following Beam Construction (Cheltenham) Ltd (BC) to enforce the adjudicator’s decision.  The contract was a JCT D&B 2005, Rev 2, 2009 in the sum of £749,726 for the construction of a hall.  The Scheme for Construction Contracts applies if a dispute is referred to adjudication.  Numerous issues arose in relation to a draft final account and a final account and more specifically as to what was the correct amount to be deducted by way of retention. WTC sought to terminate the employment of BC and then prevented BC from gaining access to the site; unsurprisingly BC contended that this was a fundamental breach of contract. BC served its Notice identifying when Practical Completion had been achieved and its numerous applications for extensions of time.  WTC argued that there were four disputes that were referred to adjudication.  These were the draft final account, the final account, the claim for interest on underpayment of retention and the claim for payment of the whole retention based on repudiatory breach. BC argued that there was one dispute which encompassed what was due and owing.

Held (Akenhead J)

It was not the Court’s function to determine the underlying issues in this case; but to determine if all issues constituted one dispute.  The judge formed the view that there was only one dispute between the parties by the time the Notice was served and only one dispute which was referred to adjudication.  The draft final account was interpreted as meaning that it was simply a draft, an interim or a provisional assessment as to what was due.  The final account added two additional claims, additional prolongation claims, two interest claims, an insurance premium and legal costs claim.  This final account was intended to be an updated and finalised final claim and must be seen to have replaced the draft final account.  In determining the value of the final account, Practical Completion had to be determined also and consequently all other matters raised would be determined for the completeness of the final account.  What a dispute in any given case is will be a question of fact albeit that the facts may require interpretation.  Courts should not adopt an over legalistic analysis of what the dispute between the parties is, bearing in mind that almost every construction contract is a commercial transaction and parties cannot broadly have contemplated that every issue between the parties would necessarily have to attract a separate reference to adjudication. Interestingly Akenhead in his conclusions provided a useful rule of thumb, in that: “if disputed claim No 1 can not be decided without deciding all or parts of disputed claim No 2, that establishes such a clear link and points to there being only one dispute.” The adjudicator had jurisdiction to make his decision and judgment was in favour of BC, enforcing the decision of the adjudicator.