Adjudication – "No dispute" challenge crystal clear

There are lessons to be learned from even the most straightforward case of litigation.

We represented a client in the Technology & Construction Court recently which was in most respects a perfectly routine application to enforce an Adjudicator's favourable decision for payment of money.  

The Technology & Construction Court has devised a procedure to give effect to Parliament's intention contained in the Housing Grants, Construction & Regeneration Act 1996 to promote cash flow within the construction industry.  The Court is blessed with a bench of capable and experienced Judges who are keen to dispose of their cases expediently in the interests of all concerned.

Our client's case was before Mr Justice Coulson who had thoroughly considered the papers before the start of the hearing and who literally dictated his judgment at the hearing (albeit reserving his right to 'sex it up a bit' before being published in order that it withstands subsequent scrutiny).

The case itself was unremarkable except that one of the two grounds on which the other party was relying to object to payment was abandoned on the day of the hearing.  The relinquished challenge was one that has considerably fallen out of fashion since the early days of adjudication: it was that no dispute had 'crystallised' such that there was no entitlement to refer a dispute to adjudication in the first place.  Case law has developed over recent years in such a way as to make it extraordinarily difficult to show that the matter referred to adjudication could not properly be characterised as a 'dispute'. In our case, the Judge said

'This point is almost never successful'.

The Judge also dismissed the other objection, having given it due consideration and ordered our client's opponents to pay in excess of £453,000 to our client.

The lesson from this case, however, relates to the crystallisation point.  The Judge decided that it was so hopeless a point that the Court should demonstrate its displeasure at its having been raised that a punitive Costs Order was made in respect of that issue.  In court, though not in the published judgment, the Learned Judge described the point in frank and uncomplimentary terms.  In any event, his point was clear.  The lesson to be drawn from this case is that you had better be certain that the dispute had not yet crystallised at the time of referring a matter to adjudication if you are to challenge enforcement of an Adjudicator's decision subsequently, or be ready to be on the paying end of an Indemnity Costs Order.

View the judgment.

For more information please contact Michael Bonning, associate in the construction team at michael.bonning@michelmores.com or on 01392 687586.

Michael Bonning is an Associate Solicitor in Michelmores LLP's Construction Team.  He is recognised as a "Leading Individual" in Chambers Legal Directory. He specialises in dispute resolution and gains praise from clients for having the ability to "assess issues quickly and provide advice that brings clarity and simplicity to the matter."