27 November 2019

HCR makes law (again!)

LJH Paving Limited -v- Meeres Civil Engineering [2019] EWHC 2601 (TCC)

Acting for the claimant, LJH Paving Limited (LJH), in a successful enforcement action of four adjudicator’s decisions, Lucinda Baker led on a reported case in the Royal Courts of Justice (Technology and Construction Court). This is the second reported case for Lucinda and the construction team in two years.

The case dealt with a multi-faceted defence to the enforcement by Meeres Civil Engineering Limited (Meeres) who sought to resist the enforcement on the basis that (1) the dispute had not crystallised and (2) the adjudicator’s decision related to more than one contract.

Pre-existing dispute

Dealing with the first point, an adjudicator can only make a valid decision if there is a pre-existing dispute which has ‘crystallised’. Therefore, it has sometimes been successfully argued that there can be no dispute if the other party has not had time to consider a claim, or if the claim is so vague or nebulous that the other party cannot be expected to respond to it.

 

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Adam Constable QC, deputy High Court judge in the TCC, held that the fact that Meeres had requested supporting information from LJH (such as daywork sheets) did not show that the dispute was nebulous, ill-defined and had not crystallised; on the contrary, Meeres was only able to make specific requests for information because the claim was not nebulous or ill-defined.

In any event, he held that the defence would have been rejected on the grounds that it had not been raised as a jurisdictional defence in the adjudication and therefore Meeres had lost their right to do so in enforcement proceedings. Their general reservations on jurisdiction were considered “so vague as to be ineffective.”

With regard to the second point, the general rule is that an adjudicator can only consider a dispute under one contract in an adjudication, and therefore if a dispute under more than one contract is referred to an adjudicator, he may lack jurisdiction (i.e. the power) to decide the matters referred to him and his decision may be unenforceable in whole or part.

HCR is making law

 

However, Adam Constable QC also rejected Meeres’ argument that the adjudicator’s decision related to two contracts as this was unsuccessful as a substantive defence in the adjudication, and furthermore, Meeres had not reserved its right to raise a jurisdiction argument.

Nevertheless, had Meeres’ argument been successful, he held that it would have been appropriate for the court to simply deduct the amount allegedly relating to the other contract (which was only £2,463.75) from the final account, as “it would be an affront to common sense” if such a small amount would undermine the enforceability of the adjudicator’s decision for hundreds of thousands of pounds.

This case raises interesting issues relating to how to effectively reserve your position on a jurisdictional issue and whether inadequate substantiation of an application for payment prevents a dispute from crystallising. We are delighted that the court found in favour of LJH on all points in this dispute.

 

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Lucinda Baker, Partner
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Leading construction law; two reported TCC decisions on enforcement of adjudicators’ decisions for subcontractors.

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