Can the Court order payment of the Adjudicator’s valuation, where the Adjudicator lacked jurisdiction?

Table of Content

The assumed answer is no, due to a party’s ability to challenge an adjudication where the Adjudicator has no jurisdiction. However, the correct answer is yes, as set out in WRW Construction Limited v Datblygau Davies Developments Limited [2020] EWHC 1965 (TCC).

The employer, Datblygau Davies Developments Limited (“Employer”) appointed the contractor, WRW Construction Limited (“Contractor”) under a standard JCT Design and Build 2011 contract (“the Contract”) to design and build nine residences in Twickenham, London.

Due to various issues on the project, the Employer terminated the Contract in mid-2018. There were three adjudications in total, and in the second the Adjudicator decided the Employer had validly terminated the Contract.

Subsequent to this, the Employer issued a third final account adjudication (post termination) on 7 February 2020. The relief sought by the Employer in the Notice of Adjudication was for the Contractor to pay a sum of over £3million to the Employer as damages for breach of Contract and/or per clause 8.7 of the Contract.

Clause 8.7 of the Contract stated as follows:

“8.7.4   Following the completion of the Works and the making good of defects in them (or instructions otherwise as referred to in Clause 2.35), an account of the following shall within 3 months thereafter be set out in a statement prepared by the Employer: The amount of expenses properly incurred by the Employer, including those incurred pursuant to Clause 8.7.1 and, where applicable, Clause, and of any direct loss and/or damage caused to the Employer and for which the Contractor is liable whether arising as a result of determination or otherwise; The amount of payments made to the Contractor; and The total amount which would have been payable for the Works in accordance with this Contract;

8.7.5 If the sum of the amount stated under Clauses and exceeds the amount stated under Clause, the difference shall be a debt payable by the Contractor to the Employer or, if that sum is less, by the Employer to the Contractor”.

The Notice of Adjudication required the Adjudicator to determine the sums payable by the Contractor (which were to be paid within 7 days of the Adjudicator’s decision), and to order the Contractor to pay the Adjudicator’s fees.

The Contractor was successful in the adjudication, as the Adjudicator ordered the Contractor to pay a sum of negative -£568,597.32 within 7 days, meaning this sum was due from the Employer. The Contractor sought to enforce the Adjudicator’s decision by submitting a summary judgment application.

The Employer argued the Court could not award payment because it is impermissible without a valid order for payment, and by awarding this it would act as a final determination of the final account (post termination), and this would prevent any attempts to reclaim overpayments in subsequent proceedings.

After careful consideration, the Court was in agreement that the Adjudicator lacked jurisdiction to award a sum of money to the Contractor as the respondent in the adjudication, but confirmed that was not the main issue in dispute.

Therefore, the Court enforced the Adjudicator’s decision and ordered the Employer to pay sums to the Contractor, on the basis that the Court’s enforcement of the Adjudicator’s decision would not be equivalent to a final determination by the Court of the value of the final account (post termination).

Can a court award payment of the adjudicator’s valuation, even if the adjudicator had no jurisdiction to order payment was discussed in our 20 Brilliant Construction and Engineering Questions – and answers! webinar on 20 August 2020.  This question and answer was provided by David Sears KC of Crown Office Chambers. To see other Brilliant Construction and Engineering Questions and answers from the webinar, please click here to see a PDF of the presentation.

To find out how Barton Legal can help you, please click here.