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Jeremy Glover reports on a recent High Court ruling over whether an adjudication notice sent to a town council involved more than one dispute.

In the case of Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] EWHC 2332 (TCC) Beam’s Adjudication Notice included claims for money and time and that the Council was in breach of contract. The Council promptly made it clear that it considered that more than one dispute was being referred to adjudication but the adjudicator equally clearly and promptly made it clear that he did not consider the point a good one. The Council duly reserved its position and the parties found themselves before Mr Justice Akenhead.

The parties accepted that, save where otherwise agreed, only a single dispute may be referred to adjudication. The Judge noted that it was important to bear in mind that construction contracts are commercial contracts and parties can be taken to have agreed that a sensible interpretation will be given to what the meaning of a dispute is. Some disputes are simple: what is due to one or other of the parties? Equally, the Judge continued:

“A particular dispute, somewhat like a snowball rolling downhill gathering snow as it goes, may attract more issues and nuances as time goes on; the typical example in a construction contract is the ever increasing dispute about what is due to the contractor as each monthly valuation and certificate is issued; a later certificate may accept amounts in issue previously not certified but then reject some more items of work. One may in the alternative have a dispute, like the proverbial rolling stone gathering no moss, which remains the same and unaffected by later events; an example might be disputed responsibility over an accident on site.”

This led the Judge to conclude that:

  1. “Disputes arise generally when and in circumstances in which a claim or assertion is made by one party and expressly or implicitly challenged or not accepted.
  2. A dispute in existence at one time can in time metamorphose in to something different to that which it was originally.
  3. A dispute can comprise a single issue or any number of issues within it. However, a dispute between parties does not necessarily comprise everything which is in issue between them at the time that one party initiates adjudication.
  4. What a dispute in any given case is will be a question of fact. Courts should not adopt an over legalistic analysis of what the dispute between the parties is.
  5. The Adjudication and Referral Notices are not necessarily determinative of what the true dispute is or as to whether there is more than one dispute. One looks at them but also at the background facts.
  6. Where on a proper analysis, there are two separate and distinct disputes, only one can be referred to one adjudicator unless the parties agree otherwise.
  7. Whether there are one or more disputes again involves a consideration of the facts. It may well be that, if there is a clear link between two or more arguably separate claims or assertions, that may well point to there being one dispute. A useful if not invariable rule of thumb is 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.”

Here, the Council said that there were effectively four disputes being referred, (i) the draft final account, (ii) the actual final account, (iii) a claim for interest on underpayment of retention and (iv) the claim for the whole retention based on repudiatory breach. Beam said that in essence there was one dispute, namely what was due and owing to it from the Council. Mr. Justice Akenhead agreed with Beam. There was in reality only one dispute. The Judge’s reasons included that:

  • It was agreed that each different component identified in the Adjudication Notice was in fact disputed;
  • The “draft final account” of 21 January 2011 was disputed. However, the use of the expression “draft” final account must be interpreted as meaning that it was simply a draft and interim or provisional assessment by Beam as to what was due;
  • The draft final account sought the return of half of the retention amount pointed clearly to an issue which had emerged relating to when or if Practical Completion had occurred;
  • There was a clear issue between the parties as to whether Beam was entitled to an extension of time, and if so what;
  • The final account was disputed by the Council. This account added two additional variation claims, additional and altered prolongation claims, two interest claims, an insurance premium claim and legal costs claim;
  • The final account was obviously intended to be an updated and finalised final claim and must be seen to have replaced the “draft final account;” and
  • There were clear links between the final account and the other matters in issue. The prolongation claims could not be resolved without deciding what if any extension of time was due. Similarly, one could not decide the insurance claim or the level of retention to be maintained without determining when or if Practical Completion had occurred.

Jeremy Glover is a partner at Fenwick Elliott. He can be contacted by email at This email address is being protected from spambots. You need JavaScript enabled to view it..

 

 
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