DICKIE & MOORE LTD v MCLEISH (No 2)

DICKIE & MOORE LTD v MCLEISH (No 2)

That part of the adjudicator’s decision awarding sums in respect of the contractor’s final account should be enforced by severing from them the awards he made without jurisdiction in respect of the contractor’s claims for an extension of time and associated loss and expense
 

Scotland, Outer House, Court of Session

Lord Doherty

8 November 2019

 

That part of the adjudicator’s decision awarding sums in respect of the contractor’s final account should be enforced by severing from them the awards he made without jurisdiction in respect of the contractor’s claims for an extension of time and associated loss and expense

 

Lord Doherty held that the core nucleus of the adjudicator’s decision awarding sums in respect of the contractor’s final account and the restoration of sums wrongly deducted by the architect should be enforced by severing from them the awards he made in respect of the contractor’s claims for an extension of time and associated loss and expense (for which he had no jurisdiction by reason of the dispute in respect of those claims not having crystallised by the time of the reference to adjudication).

 

The judge referred to the statement of Akenhead J in Cantillon v Urvasco (2008) that the decision will not be enforced where (i) There is a decision on one dispute or difference and (ii) The adjudicator acts materially in excess of jurisdiction or in breach of the rules of natural justice. Ramsey J in Cleveland Bridge v Whessoe-Volker Stevin Joint Venture (2010) appears to have treated the statement of Akenhead J as being determinative on the issue of severance rather than being merely a guide or starting point. The preferable construction of paragraph 23(2) of the Scheme for Construction Contracts, having regard to the natural and ordinary meaning of the word “decision” and to the other provisions of the Scheme, is that the “decision” which binds parties is the decision in its entirety where (i) All of it is a valid decision or (ii) Such part of it as is valid and severable where part of the decision is affected by invalidity. That construction is more in keeping with, and serves better to advance, the policy and aims of the adjudication provisions in the Construction Act and the Scheme than the construction suggested by Ramsey J.

 

The judge stated that the following matters could not stand in the light of the decision that the dispute in respect of them had not crystallised by the time of the reference to adjudication, namely (i) The extension of time award and the associated loss and expense award of £63,093 (ii) The adjudicator’s decision that the homeowners should repay £26,000 liquidated damages which they deducted from sums due to the contractor (ie at the contract rate of £2,000 per week for 13 weeks) which followed inexorably from his decision that there should be an extension of time of 13 weeks and (iii) The deduction of £3,741 which the homeowners made for client gas used by the contractor in respect of which the adjudicator concluded that £2,806 (75%) ought to be repaid to the contractor because it represented gas used during the 13 weeks extension of time period. However, apart from these matters, the judge was satisfied that it can be said with confidence that all other parts of the decision were untainted by adjudicator’s decision and reasoning in relation to the extension of time and loss and expense which he awarded.  

 

THE FULL TEXT OF LORD DOHERTY’S OPINION

 

Introduction

 

[1] The background to this dispute is set out in my opinion of 12 September 2019 ([2019] CSOH 71). In that opinion I held that part of the claim which the pursuer made in a notice of adjudication - namely the claim for an extension of time and loss and expense - had not crystallised before the service of the notice. I found that the adjudicator did not have jurisdiction to determine that aspect of the claim.

 

[2] The pursuer now maintains that since the adjudicator had jurisdiction to decide the remainder of the claim, part of his decision may be enforced. The defenders argue that the decision was a unity and that therefore none of it may be enforced. Both parties lodged supplementary written submissions which developed their arguments for and against severance, and I heard oral submissions on 27 September 2019.  

Adjudication of construction disputes - the relevant statutory context

 

[3] One of the recommendations of the Latham Report (‘Constructing the Team’, Final Report of the Joint Review of Procurement and Contractual Arrangements in the United Kingdom Construction Industry, July 1994) was that legislation should provide for the speedy resolution of construction contract disputes by, inter alia, adjudication. This recommendation resulted in Part II of the Housing Grants, Construction and Regeneration Act 1996 (“the 1996 Act”). Every written construction contract has to contain the right to refer disputes to adjudication under a procedure which complies with section 108. If the contract contains provisions for such a right, those provisions apply. If and to the extent that it does not, the adjudication provisions of the Scheme for Construction Contracts apply. Section 114 provides for the minister to make a Scheme by regulations. Where any provisions of the Scheme apply by virtue of Part II of the Act in default of contractual provisions agreed by the parties, they have effect as implied terms of the contract (s114(4)). The regulations for Scotland are the Scheme for Construction Contracts (Scotland) Regulations 1998 (SI 1998/687)(as amended by The Scheme for Construction Contracts (Scotland) Amendment Regulations 2011 (SSI 2011/371). The equivalent provisions for England and Wales are the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649)(as amended by the Scheme for Construction Contracts (England and Wales) Amendment Regulations 2011 (SI 1998/2333). In each case the adjudication provisions of the Scheme are set out in Part I of the Schedule to the regulations.

 

The adjudication provisions in the contract

 

[4] The form of the building contract between the parties was the Standard Building Contract with Quantities for use in Scotland (2011 Edition). The parties incorporated the adjudication provisions of the Scheme as terms of the contract. Article 7 provides:

 

“Article 7: Adjudication

If any dispute or difference arises under this Contract, either Party may refer it to adjudication in accordance with clause 9.2 of the Conditions.”

Clause 9.2 of the conditions provides:

 

“Adjudication

9.2 If a dispute or difference arises under this Contract which either Party wishes to refer to adjudication, the Scheme shall apply...”     In terms of clause 1.1 of the conditions “the Scheme” is defined as:  

 

“Part 1 of the Schedule to The Scheme for Construction Contracts (Scotland) Regulations 1998 (as amended by The Scheme for Construction Contracts (Scotland) Amendment Regulations 2011).”

Part 1 of the Schedule provides:

 

“Part I ADJUDICATION

Notice of intention to seek adjudication

1.—

(1) Any party to a construction contract (“the referring party”) may give written notice (“the notice of adjudication”) of his intention to refer any dispute arising under the contract to adjudication.

(2) The notice of adjudication shall be given to every other party to the contract.

(3) The notice of adjudication shall set out briefly–

(a) the nature and a brief description of the dispute and of the parties involved;

 

(b) details of where and when the dispute has arisen;

(c) the nature of the redress which is sought; and ...

Adjudicator's decision

20.— (1) The adjudicator shall decide the matters in dispute and may make a decision on different aspects of the dispute at different times. ...

 

Effects of the decision

23.—

(1) In his decision, the adjudicator may, if he thinks fit, order any of the parties to comply peremptorily with his decision or any part of it.

(2) The decision of the adjudicator shall be binding on the parties, and they shall comply with it, until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement between the parties. ...

25.—

(1) The adjudicator shall be entitled to the payment of such reasonable amount as he may determine by way of fees and expenses incurred by him and the parties shall be jointly and severally liable to pay that amount to the adjudicator.

(2) Without prejudice to the right of the adjudicator to effect recovery from any party in accordance with sub-paragraph (1), the adjudicator may determine the apportionment between the parties of liability for the payment of his fees and expenses and such determination shall be binding upon the parties unless any effective contractual provision in terms of section 108A(2) of the Act applies. ...”

Clause 1.9 of the contract conditions

 

[5] Clause 1.9 of the contract conditions provided:

 

“Effect of Final Certificate

1.9.1 Except as provided in clauses 1.9.2, 1.9.3 and 1.9.4 (and save in respect of fraud), the Final Certificate shall have effect in any proceedings under or arising out of or in connection with this Contract (whether by adjudication, arbitration or legal proceedings) as: .1 conclusive evidence that where and to the extent that any of the particular qualities of any materials or goods or any particular standard of an item of workmanship was described expressly in the Contract Drawings or the Contract Bills, or in any instruction issued by the Architect/Contract Administrator under these Conditions or in any drawings or documents issued by the Architect/Contract Administrator under any of clauses 2.9 to 2.12, to be for the approval of the Architect/Contract Administrator, the particular quality or standard was to the reasonable satisfaction of the Architect/Contract Administrator, but the Final Certificate shall not be conclusive evidence that they or any other materials or goods or workmanship comply with any other requirement or term of this Contract;

.2 conclusive evidence that any necessary effect has been given to all the terms of this Contract which require that an amount be added to or deducted from the Contract Sum or that an adjustment be made to the Contract Sum save where there has been any accidental inclusion or exclusion of any work, materials, goods or figure in any computation or any arithmetical error in any computation, in which event the Final Certificate shall have effect as conclusive evidence as to all other computations;

.3 conclusive evidence that all and only such extensions of time, if any, as are due under clause 2.28 have been given; and

.4 conclusive evidence that the reimbursement of direct loss and/or expense, if any, to the Contractor pursuant to clause 4.23 is in final settlement of all and any claims which the Contractor has or may have arising out of the occurrence of any of the Relevant Matters, whether such claim be for breach of contract, duty of care, statutory duty or otherwise. ... .

3 If adjudication, arbitration or other proceedings are commenced by either Party within 60 days after the Final Certificate has been issued, the Final Certificate shall have effect as conclusive evidence as provided in clause 1.9.1 save only in respect of the matters to which those proceedings relate.

4 In the case of a dispute or difference on which an Adjudicator gives his decision on a date after the date of issue of the Final Certificate, if either Party wishes to have that dispute or difference determined by arbitration or legal proceedings, that Party may commence arbitration or legal proceedings within 28 days of the date on which the Adjudicator gives his decision.”

 

The adjudicator’s terms and conditions of appointment

 

[6] The parties accepted the adjudicator’s terms and conditions of appointment. Those terms provided:

 

“... 5. The parties will be jointly and severally liable for my fees, expenses and outlays and those of other advisors.

  1. Notwithstanding the joint and several liability of the parties or any Decision I make with regard to the apportionment of fees, my policy is to split the fees equally between the parties during the process, and in my Decision my fees will be apportioned. ...”

Joint Minute

 

[7] In terms of the Joint Minute no 28 of process the parties agreed:

 

“... 43. The parties are jointly and severally liable to pay the adjudicator’s fees and expenses in terms of clause 3 of the adjudicator’s terms of appointment accepted by them ...

  1. The adjudicator rendered Fee Accounts dated 15 March 2019 addressed to each of the parties hereto ...
  2. The Fee Accounts detailed the total amount of the adjudicator’s fees and expenses.
  3. The pursuer has paid the entirety of the adjudicator’s fees and expenses in the amount of £32,550 plus VAT.

47 If the adjudicator had jurisdiction and issued an enforceable decision, the pursuer is entitled to relief from the defenders in respect of half the adjudicator’s fees and expenses in the sum of £19,530 (without prejudice to the pursuer’s contention that it is entitled to relief from the defender regardless of the determination on other issues).”

 

Counsel for the pursuer’s submissions

 

[8] Mr Turner submitted that while the court had found that the adjudicator did not have jurisdiction to deal with part of the dispute because it had not crystallised at the date of the notice of adjudication, the remainder of the dispute had crystallised and the adjudicator had had jurisdiction to deal with it. In principle, severance should be available in such circumstances provided that the court was satisfied that the parts of the decision which were enforced were not dependent upon, and had not been affected by the reasoning in, the part of the decision dealing with extension of time and related loss and expense. In support of that proposition Mr Turner relied in particular upon Homer Burgess Ltd v Chirex (Annan) Ltd 2000 SLT 277, per Lord Macfadyen at p 287D; Bovis Lend Lease Limited v The Trustees of the London Clinic, (2009) 123 Con LR 15, [2009] EWHC 64 (TCC), per Akenhead J at paragraphs 69 - 70; Pilon Limited v Breyer Group plc [2010] BLR 452, [2010] EWHC 837 (TCC), per Coulson J at paragraphs 39-40; Carillion Utility Services Ltd v SP Power Systems Ltd 2012 SLT 119, per Lord Hodge at paragraph 39; Working Environments Ltd v Greencoat Construction Ltd (2012) 142 Con LR 149 (TCC), [2012] EWHC 1039 (TCC), per Akenhead J at paragraphs 25 and 32 - 35; Lidl UK GmbH v RG Carter Colchester Limited [2012] EWHC 3138 (TCC) per Edwards-Stuart J at paragraphs 57-61; Beck Interiors Limited v UK Flooring Contractors Limited [2012] BLR 417, [2012] EWHC 1808 (TCC), per Akenhead J at paragraphs 32 - 34; Paice & Ors v Matthew J Harding (trading as MJ Harding Contractors) [2016] BLR 582, [2016] EWHC 2945 (TCC), per Deputy High Court Judge Ms Finola Farrell QC (as she then was) at paragraphs 68, 70-71; and Willow Corp SARL v MTD Contractors Limited [2019] EWHC 1591 (TCC), per Pepperall J at paragraphs 67-74. If and in so far as observations in Cantillon Limited v Urvasco Limited [2008] BLR 250, (2008) 117 Con LR 1, [2008] EWHC 282 (TCC), CSC Braehead Leisure Ltd v Laing O’Rourke Scotland Limited 2009 SLT 454, Cleveland Bridge (UK) Limited v Whessoe-Volker Stevin Joint Venture [2010] BLR 415, [2010] EWHC 1076 (TCC), Carillion Utility Services Ltd v SP Power Systems Ltd, supra, or Highlands and Islands Airports Ltd v Shetland Islands Council [2012] CSOH 12 might be suggested to be to contrary effect, those cases were distinguishable. If the cases were not distinguishable, in so far as the observations were at odds with the proposition which Mr Turner advanced they should not be followed. On a proper analysis of the claims here for the purposes of considering whether severance was available there was in substance more than one dispute. Another way of approaching matters would be to treat the matters within jurisdiction and the matters for which there was no jurisdiction as being two separate disputes for the purposes of severance. The present circumstances were therefore distinguishable from the cases where on such analysis there was a single dispute. In any case, it could not be correct that it was all or nothing - that in terms of the Scheme the obligation to comply with any part of a decision was always conditional upon the entirety of the matters decided having been within jurisdiction. If that was the position there would never be severance where part of a dispute had not crystallised, even if it was a tiny and discreet part of the dispute.  

 

[9] Here, it was clear that the issues of extension of time and loss and expense had been dealt with separately from most of the other issues. The court could be confident that the adjudicator’s approach to the sums awarded in the Works Final Account (for Bill of Quantity items, Architect’s Instructions and other variations) were all unaffected by the jurisdictional error. The position was the same in relation to sums which the adjudicator had found that the architect had been wrong to deduct from the pursuers (for heating, mechanical ventilation with heat recovery (“MVHR”), ground retention, externals and internals). He had dealt with all of these items separately and independently from his consideration of extension of time and loss and expense. The sum which he awarded for Architect’s Instruction 25 (“AI 25”) was simply the cost of the work caused by that instruction - it had not depended in any way upon his conclusions in relation to extension of time and loss and expense. Only two other aspects of his decision had been influenced by the extension of time award. Both were matters where the extension of time awarded had a direct bearing on the calculation. First, since he found the pursuer entitled to a 13 week extension of time, he held that the architect had been wrong to deduct £26,000 liquidated damages (13 weeks at £2,000 per week) from the pursuer because the works were not completed by the contractual completion date. Second, whereas the architect had deducted £3,741.36 from the pursuer for gas supplied by the defenders and consumed by the pursuer, the adjudicator found that only £935.32 ought to have been deducted because the pursuer was not liable for gas consumed during the extension of time period. Neither of those aspects of the decision could be enforced, with the result that the deductions of £26,000 and £3,741.36 made by the architect ought to stand.  

 

[10] Mr Turner’s primary position was that there was no good reason not to enforce the award of fees and expenses, since in terms of the contract it was agreed that there should be joint and several liability. Properly read, paragraph 283 of the decision was merely a statement by the adjudicator of that agreed position. It had not been a considered allocation of liability. If it had been, and if the court was not clear that the adjudicator would have allocated fees and expenses in the same way if his decision had only dealt with the matters which were within jurisdiction, the award of fees and expenses should not be enforced, but the parts of the decision which were not affected by the excess of jurisdiction should be severed and enforced (Bovis Lend Lease Limited v The Trustees of the London Clinic, supra, per Akenhead J at paragraph 70).

 

[11] So far as interest was concerned, the adjudicator (paragraph 282) had awarded simple interest at the rate of 5% above the base rate from 18 April 2018 (the date of Valuation Number 17) until the date of his decision. That approach was unaffected by his jurisdictional error. Interest at that rate and for that period should be applied to those parts of the principal sum awarded by the adjudicator which could be severed and enforced. That was all of the principal sum apart from the £63,093.47 for loss and expense, the reimbursement of £26,000 liquidated damages, and the reimbursement of £2,806.04 of the deduction for client gas. The balance of the principal sum recoverable was therefore £232,593.09. The interest on that sum from 18 April 2008 to the date of the adjudicator’s decision was £11,994.47.

Counsel for the defenders’ submissions

 

[12] Mr MacColl submitted that the adjudicator’s decision should be reduced ope exceptionis and that the defenders should be assoilzied from the conclusions of the summons.

 

[13] First, a single dispute had been referred to adjudication. However, the adjudicator had not had jurisdiction to determine that single dispute because part of it had not crystallised. The logical consequence was that the single dispute had not crystallised, and that the adjudicator had not had jurisdiction to determine any of it. He ought to have declined jurisdiction.  

 

[14] Second, on a proper construction of the contract the parties had contracted to be bound by “the decision” of the adjudicator (paragraph 23(2) of the Scheme). They had not agreed to be bound by part of the decision where the adjudicator had lacked jurisdiction in relation to another part. In that regard reliance was placed upon the observations of Cleveland Bridge (UK) Limited v Whessoe-Volker Stevin Joint Venture, supra, per Ramsey J at paragraphs 11ff and CSC Braehead Leisure Limited v Laing O’Rourke Scotland Limited, supra, per Lord Menzies at paragraphs 38 - 40. As Akenhead J had observed in Cantillon Limited v Urvasco Limited ([2008] EWHC 282 (TCC) and (2008) 117 Con LR 1 at paragraph 63, ([2008] BLR 250 at paragraph 65):

 

“... (f) In all cases where there is a decision on one dispute or difference, and the adjudicator acts, materially, in excess of jurisdiction or in breach of the rules of natural justice, the decision will not be enforced by the Court.”

That was the conventional approach, as could be seen from cases such as Highlands and Islands Airports Limited v Shetland Islands Council, supra, per Lord Menzies at paragraphs 41 - 47; Carillion Utility Services Ltd v SP Power Systems Ltd, supra, per Lord Hodge at paragraph 39; Whyte and Mackay Ltd v Blyth & Blyth Consulting Engineers Ltd 2013 SLT 555, per Lord Malcolm at paragraphs 69 - 71; Bell Building Projects Limited v Arnold Clark Automobiles Limited [2017] CSOH 55, per Lord Tyre at paragraphs 33 - 35; and DC Community Partnerships Limited v Renfrewshire Council [2017] CSOH 143, per Lord Doherty at paragraph 32.  

 

[15] Third, Mr MacColl accepted that there were now a number of first instance decisions in England and Wales (Beck Interiors Limited v UK Flooring Contractors Limited, Lidl UK GmbH v RG Carter Colchester Limited, Paice & Ors v Matthew J Harding (trading as MJ Harding Contractors), and Willow Corp SARL v MTD Contractors Limited) where, notwithstanding what had been said in Cantillon and subsequent cases, courts had been willing to sever and enforce parts of an adjudicator’s decision which were clearly and obviously untainted by the nullity of another part of the decision. However, even if that were the test, the pursuer failed on the facts here. There were no parts of the decision where it could be said that it was clear and obvious that the reasoning had been untainted by the adjudicator’s decision on extension of time and related loss and expense. The findings that 13 weeks liquidated damages (£26,000) ought not to have been deducted, and that the architect’s deduction of £3,741.36 for client gas ought only to have been £935.32 were consequences of the adjudicator’s decision to grant the extension of time. The terms of paragraph 323 of the decision suggested there may be some link between the sum awarded for work done in response to AI 25 and the extension of time which the adjudicator granted. Similarly, the terms of paragraph 333 might suggest that there may be a link between the extension of time and the deduction which the architect made for ground retention works to the northern embankment. It was sufficient for the defenders’ purposes that it was not clear that there were no such links. More generally, the court simply ought not to be satisfied that it was clear and obvious from the adjudicator’s decision that other aspects of the award had been completely discrete from and had not been influenced by his decision and reasoning concerning the extension of time and loss and expense. In any case, what the pursuer proposed was not merely severance, but the rewriting of the decision. The adjudicator had awarded a lump sum for interest (calculated at 5% over base rate from 18.4.18, the date of valuation 17). The court should be slow to conclude that the calculation of interest on severable parts of the award would merely be a matter of arithmetic and that the adjudicator’s conclusions on extension of time and loss and expense had had no bearing on the date chosen as the starting point for interest.

Decision and reasons

 

[16] I find it convenient to begin by considering some of the authorities which were referred to.

 

[17] Homer Burgess Ltd v Chirex (Annan) Ltd was decided on 18 November 1999. It provides some support for the proposition that severance of an adjudicator’s decision may be competent and appropriate even in a single dispute case. It was a case where part of what the adjudicator decided (the lesser part) was within jurisdiction, but part (the greater part) was not. Lord Macfadyen considered that it would have been open to him to investigate the extent to which the decision was intra vires and valid and could properly be given the statutory temporary binding effect which paragraph 23(2) of the Scheme provided for (2000 SLT 277 at p 287D). However, practical considerations led him to conclude that in the circumstances reduction of the whole decision was the preferable course. The primary consideration was that that way the matter could return to the adjudicator, which would be likely to result in quicker enforcement than the court dealing with the question. Had there been any doubt about the competency of returning to the adjudicator he would have preferred to deal with the outstanding issue himself.

 

[18] Cantillon Limited v Urvasco Limited was decided on 27 February 2008. The building contract was a JCT Standard Form of Building Contract, Private Without Quantities (1998 Edition), which contained the standard adjudication clause providing that the Part 1 of the Schedule to the Scheme for Construction Contracts (England and Wales) Regulations 1998 applied. Akenhead J described the dispute which had been referred to adjudication as a “compendious dispute” encompassing two claims by contractors for extensions of time, one for 16 weeks and the other for 13 weeks, and for related loss and expense (paragraph 3). The 16 weeks claim related to events in 2005 and the 13 weeks claim related to events in 2006. The architect had granted an extension of time of 13 weeks in relation to the 13 week claim, but he did not grant any extension for the 16 weeks claim. The adjudicator awarded a total of £391,565.60 plus VAT. About one-fifth of that sum related to the 13 weeks claim. He decided that the 13 weeks extension of time ought only to entitle the contractor to 9.71 weeks prolongation. He dealt with prolongation loss and expense for each claim separately, and he awarded sums in respect of each claim. He ordered that 70% of his fees be paid by the employer and 30% by the contractors. When the contractors sought to enforce the decision the employer argued that, in relation to the 13 weeks claim, the adjudicator had exceeded his jurisdiction and had failed to comply with natural justice. Ultimately, Akenhead J decided that neither complaint was well founded, and he enforced the decision in its entirety. However, he considered the issue of severance, beginning at paragraph 58:

 

“58 During the course of argument the question arose as to whether parts of an Adjudicator's decision could be enforced and other parts not, in circumstances where the Adjudicator's want of jurisdiction or failure to follow the rules of natural justice only and obviously related to one part of the decision. There has been surprisingly little authority directly on the point ...”

He went on to discuss the case law (including Homer Burgess) and he made extensive reference to a review of that case law in an article by Sheridan and Helps, Construction Act Review, [2004] Const. LJ 71. He then opined ([2008] EWHC 282 (TCC) and (2008) 117 Con LR 1 at paragraph 63, and [2008] BLR 250 at paragraph 65):

 

“63 On the severability issue, I conclude, albeit obiter in the result, as follows:

(a) The first step must be to ascertain what dispute or disputes has or have been referred to adjudication. One needs to see whether in fact or in effect there is in substance only one dispute or two and what any such dispute comprises.

(b) It is open to a party to an adjudication agreement as here to seek to refer more than one dispute or difference to an adjudicator. If there is no objection to that by the other party or if the contract permits it, the adjudicator will have to resolve all referred disputes and differences. If there is objection, the adjudicator can only proceed with resolving more than one dispute or difference if the contract permits him to do so.

(c) If the decision properly addresses more than one dispute or difference, a successful jurisdictional challenge on that part of the decision which deals with one such dispute or difference will not undermine the validity and enforceability of that part of the decision which deals with the other(s).

 

(d) The same in logic must apply to the case where there is a noncompliance with the rules of natural justice which only affects the disposal of one dispute or difference.

(e) There is a proviso to (c) and (d) above which is that, if the decision as drafted is simply not severable in practice, for instance on the wording, or if the breach of the rules of natural justice is so severe or all pervading that the remainder of the decision is tainted, the decision will not be enforced.

(f) In all cases where there is a decision on one dispute or difference, and the adjudicator acts, materially, in excess of jurisdiction or in breach of the rules of natural justice, the decision will not be enforced by the Court.”

[19] Given Akenhead J’s decision in Cantillon no issue of severance arose, but the judge thought it appropriate to make clear what he would have done had the issue arisen (the emphasis has been added by me):

 

“76. [but 78 in [2008] BLR 250] ... Since the point of severability was raised and it is an issue of some importance and interest to the construction industry and professions, I will comment upon what I would have done if I had found that there had been a more than peripheral breach of the rules of natural justice by the Adjudicator. I would have given judgment in favour of Cantillon in respect of all other parts of the decision which could be said with confidence were unrelated to and untainted by any such breaches. The reasons are as follows:

(a) On analysis, there were at least two disputes submitted here, namely that related to the 16 Weeks and to the 13 Weeks Claims. They were presented separately both before and in the Notice of Adjudication and the Referral. They were, logically and time-wise, separable claims relating to differing years and different factors said to have been causative of delay and cost. The quantum as presented by Cantillon was divisible into that relating to the two claims.

(b) The Adjudicator dealt with them separately in his decision.

(c) In this case, if there was a breach of natural justice even if more than peripheral, it was or would have been more of the inadvertent type rather than one which wholly undermined the decision and reliability of the Adjudicator. There was no hint or suggestion that his decision on all other matters was not anything other than fair, competent and reliable.

(d) The decision is in fact arithmetically divisible. The sums due in respect of the 16 weeks claim are:

 

(i) Prolongation (Appendix 1 to decision as amended by the Adjudicator): £125,825.04.

(ii) Head Office Overheads (see Paragraph 8.28 of decision): £304,739.65.

(iii) Finance on retention (13/29ths of £3,702.14): £1,659.58

(iv) Finance on loss and expense: one could either “pro-rata” this (16/25.71 of £22,978.03 = £14,299.82) or do a more detailed calculation by reference to the fact that the financing for the 16 weeks which occurred earlier will probably have attracted a larger share than that: if in doubt, one would allow the lower figure.

So far as the deduction of “less amounts paid [to Cantillon] to date” identified by the Adjudicator, I would have called for more argument on this from the parties; this has been forthcoming in writing since the oral argument. I would probably have decided that there should be a deduction for the amount paid. Although the evidence before me and the Adjudicator was that the sum paid (of £260,000) was for the 13 Weeks Claim, it would be wrong to second guess the Adjudicator as to what he would have done with regard to this sum if he had allowed nothing for the 13 Weeks Claim. Thus, the minimum to be enforced separately would have been the sum of the figures set out above less the Adjudicator's sum paid figure of £192,971, namely £253,553.09. It would be unnecessary to deal with the Adjudicator's fees as they have been paid by the parties.”

[20] Bovis Lend Lease Limited v The Trustees of the London Clinic was decided on 28 January 2009. Contractors (“BLL”) referred a dispute to adjudication. The building contract was the JCT Standard Form of Building Contract (1998 Edition). The notice of adjudication stated (see paragraph 20 of the judgment):

 

“The dispute comprises the following inter-related issues:

(1) Whether and to what extent delay and/or disruption was caused by BLL's Contract works by reason of matters for which the Clinic was responsible;

(2) The period of any Extension of Time to which BLL is entitled;

(3) BLL's entitlement to reimbursement of Liquidated and Ascertained Damages deducted during the period of this Extension of Time in the sum of £40,000 per week;

(4) The losses and expenses incurred by BLL by reason of the delay and disruption to the Contract Works.”

 

The remedies sought included an extension of time of 44.2 weeks (including four weeks already awarded by the architect), together with recovery of £1,608,000 for liquidated damages deducted and £3,287,245.44 for loss and expense arising from delay and disruption. The adjudicator decided (i) that BLL was entitled to the full extension of time claimed; (ii) that the Clinic should reimburse the £1,608,000 liquidated damages; (iii) that the Clinic should pay £1,878,257.09 in respect of loss and expense; (iv) that the Clinic should pay the adjudicator’s fees and expenses. The Clinic resisted enforcement of the award on two grounds. First, that at the time of the notice of adjudication the loss and expense claim had not been a crystallised dispute: the adjudicator had not had jurisdiction to determine it. Second, that the Clinic had not had a fair or effective opportunity to respond to the new case made for loss and expense: there had been a material breach of natural justice. In the result Akenhead J rejected both of these contentions, but in the course of his judgment he considered whether or not it would have been legally and practically possible to sever the adjudicator's decision if the adjudicator had jurisdiction to address the dispute relating to delay, extension of time and the recovery of liquidated damages but did not have jurisdiction to address the loss and expense claim.  

 

The Law ...

  1. So far as “severability” is concerned, I addressed this matter in Cantillon Ltd v Urvasco Ltd [2008] BLR 250 at paragraph 63 ...
  2. The starting point is the analysis of what is the referred dispute (or disputes). If there is a disputed claim A and there is another claim B which has not yet got to a stage of being disputed, and the claiming party refers A and B to adjudication, there is on analysis only one dispute being referred, namely A because that is all that is in dispute. Even if, mistakenly, the adjudicator adjudicates on A and B, that part of his decision which addresses dispute A will be enforced unless it is simply not possible verbally or mathematically to identify what his decision on A alone is. ...

 

Discussion – Severability

  1. It follows from the above that, since the Adjudicator had jurisdiction and there has been no breach of the rules of natural justice, the question of severability simply does not arise. If I had had to decide the point, I would only have done so on the basis that the Clinic had established its jurisdictional argument in relation to the loss and expense claim (which it has not). If I had formed the view that the Adjudicator had simply, consciously, not given the Clinic sufficient time to respond (within the constraints of the adjudication timetable available in this case), this would probably not have been a case which would have led to severance. However, on a jurisdictional basis, if I had formed the view that the crystallised dispute did not include the claim for loss and expense, I would have been of the view that that part of the decision which demonstrably related to the extension of time claim and the recovery of liquidated damages could be recovered. The Award was one which was eminently severable. The Adjudicator indicated clearly what “redress” he was granting with regard to the extension and liquidated damages issues. He allowed Bovis a declaration of entitlement to an extension of 44.2 weeks and directed that the Clinic reimburse Bovis liquidated damages in respect of the extension of time together with interest up to 10 June 2008.
  2. The only difficulty would have come with regard to the question of the Adjudicator's fees and expenses which were not apportioned as between the two parts of the claim. If that had proved an insuperable difficulty, leave to enforce that part of the decision would simply not have been made.”

[21] CSC Braehead Leisure Limited v Laing O’Rourke Scotland Limited was decided on 19 August 2008. A dispute arose between employers and contractors as to whether or not the contractors had, by defective work in breach of contract, caused damage to the employers; and if so, to what damages the employers were entitled. The employers referred the dispute to adjudication. The adjudicator made an award in the employers’ favour. The contractors resisted enforcement of the award on several grounds, none of which was upheld by the court. However, in the course of his Opinion Lord Menzies considered whether the decision might be severed if there was a successful challenge to one part of it. He noted (paragraph 35) senior counsel for the contractors’ acceptance “that a dispute might include several sub-disputes, and whether parts of an adjudicator’s award might be saved if other parts were invalid depended on the circumstances and the nature of the challenge.” The submission for the contractors was that there was a single dispute - a declarator of causation of damage was not a separate dispute from the damages sought (paragraph 36). Lord Menzies’ conclusions on severability were set out in paragraphs 38-40:

 

“[38] In considering this issue, I have found most assistance from Akenhead J’s review of the authorities in Cantillon Ltd v Urvasco Ltd, and I respectfully agree with the approach which he sets out (albeit obiter) at paragraph 63. In the present case I agree with senior counsel for the defenders that the contractual mechanism for adjudication envisages (at least in the first instance) that a single dispute or difference shall be referred to adjudication. Clause 39A.4.1 provides that the adjudicator may, with the consent of all the parties to those disputes, adjudicate at the same time on more than one dispute under the same contract. Looking to the notice of adjudication... [it] refers throughout to ‘‘the Dispute’’ or ‘‘a Dispute’’ in the singular. Section 4 of the notice summarises ‘‘the Dispute’’, and paragraph 4.3 states inter alia in short, the defenders’ failures can be summarised as a failure to design and/or construct works to each of the 12 auditoria, which form part of the cinema in accordance with the terms of the building contract. Those failures caused or materially contributed to a ceiling collapse in one of the auditoria and caused or materially contributed to the defenders’ works in the other 11 auditoria being defective and/or unsafe and/or necessitating extensive remedial works to be undertaken in each of the other 11 auditoria. The notice goes on to state that the pursuers have suffered loss and expense and/or damages as a result of these failures and contends that the defenders are liable to the pursuers in respect thereof ...

[39] The pursuers do not aver that the defenders have consented to the adjudicator adjudicating at the same time on more than one dispute in terms of cl 39A.4.1. The language of the pursuers’ notice of adjudication is strongly suggestive of the pursuers regarding this truly as one dispute. I am in no doubt that a single dispute may contain sub-disputes or heads of claim which may themselves be the subject of dispute, but this does not necessarily result in more than one dispute being referred to the arbiter (sic).To take a simple example of a personal injuries action arising from an accident at an employee’s workplace, the pursuer may rely on breaches of variety of statutory and common law duties, and may seek several heads of damages including solatium, past and future loss of earnings, loss of employability, personal services, loss of pension rights etc. Each of these may be disputed, but these may be described as incidental disputes or ‘‘sub-disputes’’ - there is truly only one dispute, which is whether the employer is liable to make reparation to the employee, and if so, in what sum. No doubt this is an over simplistic analogy when considering the present case. However, having regard to the terms of the contract and to the notice of adjudication, I am satisfied that in substance only one dispute was referred to adjudication.

[40] That being so, I am satisfied that if there is a successful challenge to one part of the adjudicator’s decision (which challenge cannot, of course, relate to an intra vires error of law, but may relate to something such as breach of natural justice or excess of jurisdiction or failure to exercise jurisdiction) then the whole decision will fall to be reduced.”

[22] Cleveland Bridge (UK) Limited v Whessoe-Volker Stevin Joint Venture was decided on 13 May 2010. Works done under a subcontract were only partly construction operations in terms of Part II of the 1996 Act. Consequently, only part of a dispute referred to an adjudicator had been within her jurisdiction. The issue of jurisdiction was contentious during the adjudication and the subcontractors requested the adjudicator to set out her decision on the basis of two alternatives: first, on the basis that she had jurisdiction to award the whole amount claimed; and secondly, on the basis that she was only entitled to consider the proportion of the outstanding amount which related to construction operations under the Act. However, she decided that she had jurisdiction to deal with the whole claim and she did not provide an alternative decision. Ramsey J opined:

 

“100 ...[T]he dispute between the parties to the Subcontract was, in my judgment, one dispute. That dispute was whether the sum of £317,500 plus VAT agreed in the final account was due and payable to Cleveland Bridge from the Joint Venture. That depended on the resolution of the issues on the effect of the settlement agreement on the payment due to Cleveland Bridge. The effect of section 104(5) is that the whole of that dispute cannot be referred to adjudication. I do not consider that this converts the single dispute into two disputes, rather only part of the dispute is referable to adjudication; the other part is not. ...

103 I therefore conclude that what Cleveland Bridge did by the Notice of Adjudication was to refer one dispute to the Adjudicator who only had jurisdiction to deal with that dispute insofar as it arose under the part of the Subcontract which related to construction operations ...

104 As a result I consider that the effect of section 104(5) was that the Adjudicator did not have jurisdiction to deal with the whole of the dispute referred to her but did have jurisdiction in relation to that part of the dispute which related to construction operations under the Subcontract.

105 Where a party refers a dispute to an adjudicator who only has jurisdiction in respect of part of that dispute, I do not consider that there is anything, in principle, which prevents the adjudicator from making a decision as to that part of the dispute which is within his or her jurisdiction. In other words, the fact that part of the dispute relates to matters over which an adjudicator has no jurisdiction does not prevent the adjudicator from exercising the jurisdiction that he or she has.”

As to severance, Ramsey J opined (at paragraph 113) that paragraph 23(2) of the (English) Scheme did not bind the parties to comply with anything less than all of a valid decision:

 

“113 As a matter of interpretation of that statutory implied term I do not consider that... that provision imposes an obligation on the parties to comply with the part of any decision, which was within the adjudicator's jurisdiction where part is made without jurisdiction. Neither do I consider that there can be a further implied term that the parties will comply with that part of a decision.

114 In Cantillon v Urvasco at [65(f)] Akenhead J summarised the position in this way:

 

“In all cases where there is a decision on one dispute or difference, and the adjudicator acts, materially, in excess of jurisdiction … the decision will not be enforced by the Court.””

Ramsey J disagreed with Lord Macfadyen’s view in Homer Burgess that where a decision is made, part of which is outside the adjudicator's jurisdiction, it was open to the court to enforce the part which was intra vires:

 

“118...The whole of the decision is not enforceable and the contractual agreement to be bound by that decision does not apply. I do not think that in the context of the agreement to be bound by a temporary decision, the decision can be dissected to impose a separate and severable obligation to be bound by the adjudicator's decision on each of the component issues on which the adjudicator based that decision. Otherwise, the process of adjudication enforcement could be diverted into satellite litigation which is not appropriate when the court is concerned with the enforcement of a decision which has temporarily binding effect. In this case the decision related to the whole sum of £317,500 plus VAT. I do not consider that the court can or should intervene and say what the Adjudicator may have found to be the value of the work relating to the element of the Subcontract within her jurisdiction.”

He went on to conclude that, in any event, it was not clear how the award would be divided between the part of the decision which was intra vires and the part which was ultra vires. However, he would have been likely to find that the sum of £100,747.20 represented a minimum due (paragraph 123).  

 

[23] Pilon Ltd v Breyer Group plc was decided on 23 April 2010. Coulson J found that an adjudicator had deliberately placed an erroneous restriction on his own jurisdiction in relation to an overpayment defence, which amounted to a breach of natural justice. He considered whether the remainder of the decision was severable. He took as his starting point propositions (a) to (f) set out by Akenhead J at paragraph 63 [65] of Cantillon. He continued:

 

“40. This is a case where there was said to be one dispute: namely what, if anything, was due as a result of the interim application of September 2009. Therefore, on the basis of the approach in Cantillon, it is difficult to see how the decision could sensibly be regarded as severable. On the contrary, in accordance with paragraph 65 of the judgment of Akenhead J in Cantillon, it seems to me that the adjudicator's decision is not severable. I acknowledge that it may soon be time for the TCC to review whether, where there is a single dispute, if it can be shown that a jurisdiction/natural justice point is worth a fixed amount which is significantly less than the overall sum awarded by the adjudicator, severance could properly be considered. That was, after all, the basis on which summary judgment applications were routinely decided before the HGCRA. However, as a result of my other findings, this is not the place to consider that issue further.  

  1. In part, this is because I have already accepted that there is some force in Mr Bowling's suggestion that the adjudicator's failure to address the over-payment point may well have affected other aspects of his decision, such as his acceptance of Pilon's case as to the value of the cross-contract set-off. Thus, even if the decision was severable in principle, there is the risk that the decision as a whole was tainted by the material error (see paragraph 65(e) of Akenhead J's judgment) which would be another reason not to sever in practice.  
  2. If I was wrong as to severance, then the overpayment defence, worth £147,774, would be stripped out of the claim to enforce the adjudicator's decision, leaving some £60,000 odd, together with VAT and interest, due and payable to Pilon.”

[24] Carillion Utility Services Ltd v SP Power Systems Ltd was decided on 18 August 2011. Lord Hodge found that an adjudicator had breached the rules of natural justice by applying a commercial rate from his own experience without giving the parties an opportunity to comment upon it. The breach affected only part of the adjudicator’s award. Lord Hodge refused to sever the award:

 

“[39] It is clear that the fact that parties have contracted for a decision by an adjudicator does not prevent the court severing parts of his decision if he has determined separate disputes in the one decision. See Cantillon Ltd, Akenhead J at para. 65. At present, subject to Coulson J’s doubts [Pilon Ltd v Breyer Group Plc (at paras 39 and 40) and AMEC Group Ltd v Thames Water Utilities Ltd (at paras 99 and 100)], the case law, to which counsel referred, has set its face against allowing the severance of parts of a decision in one dispute.

[40] I can see that the policy of encouraging the speedy provisional resolution of construction disputes might support pragmatic arguments in particular cases in favour of separating liability and quantum in an adjudicator’s decision where he has fallen into error in relation to quantum alone. The same considerations may support the approach which Coulson J has advocated. But it is not necessary for me to decide on the competency of the severance of part of a single dispute in this case as I have formed the view that a partial enforcement of Dr Hunter’s award would be likely to create complexities which are better avoided.

[41] In this case the decision which Dr Hunter reached on the merits may have influenced his decision on expenses. He held that SP were to pay 60 per cent of his fees and expenses. It may be that, in so doing, he took account of the relative degrees of success of the parties’ submissions. I cannot conclude that if he had decided that SP was wrong to say that nothing was due for lamping and guarding but that it was correct in its fallback position that, if the item 26 rate applied, that rate exhausted the claim, he would necessarily have divided the liability in expenses in the same way. Thus I do not see how I can sever the decision on expenses from the decision on the merits or alter the decision on the merits while leaving the expenses decision in place.

[42] I note that in Homer Burgess Ltd Lord Macfadyen (at 2000 SLT, p.287) declined to pronounce a partial reduction of the adjudicator’s decision because a reduction of the decision would allow the parties to obtain a fresh decision from the adjudicator ...

[43] Carillion, if it accepts my decision, can seek reduction of the unenforceable decision and thereby open the path to a new decision if it wishes a valid provisional decision from the adjudicator...”

[25] Highlands and Islands Airports Ltd v Shetland Islands Council was decided on 20 January 2012. A dispute arose between the parties in relation to construction of runway extensions. The pursuer claimed that the defender was in breach of contract and sought damages for the breaches. It referred the dispute to adjudication. The adjudicator found that the defender was in breach and he awarded the pursuer in excess of £2 million. The defender opposed enforcement and sought reduction ope exceptionis on the ground that the decision was a nullity because the adjudicator had acted in breach of natural justice by seeking advice from senior counsel on the construction of the contract without disclosing that fact or the advice to the parties. Lord Menzies held that there had been a material breach of natural justice, but the pursuer maintained that part of the decision was unaffected by the breach and could be severed. Lord Menzies decided that the whole decision was a nullity:

 

“41 It is not disputed that partial reduction is a competent remedy in an appropriate case. Lord Macfadyen's remarks in Homer Burgess Ltd v Cirex (Annan) Ltd support this proposition, and I do not suggest that partial reduction is an incompetent remedy. However, it is worthy of note that no Court has granted this remedy in relation to the decision of an adjudicator in a single dispute case. It is not disputed that the present case is a single dispute case.”

Lord Menzies referred to the discussions on severability in KNS Industrial Services (Birmingham) Ltd v Sindall Ltd (2001) 75 Con LR 71, Cantillon, and Cleveland Bridge and concluded:

 

“46 I find the reasoning above to be persuasive. It is also consistent with the views which I expressed in CSC Braehead Leisure Ltd (at paragraphs [38] to [40]). No authority has been put before me to suggest that any Court has taken a different view in a single dispute case. While (sic) I have some sympathy with the views expressed by Coulson J in Pilon Ltd v Breyer Group plc and Amec Group Ltd v Thames Water Utilities Ltd that, in light of the intention of the 1996 Act, it may be appropriate to review whether severance could properly be considered in an appropriate single dispute case. However, I do not consider that this is such a case. As Mr MacColl observed, what the parties have contracted to be bound by is the adjudicator's decision, not a part of that decision nor the decision after the Court has rewritten it. The concerns expressed by Lord Hodge in Carillion Utility Services Ltd with regard to expenses also apply in the present case. It is far from clear to me that the adjudicator would have found the pursuer substantially successful in a situation in which the large majority of the adjudicator's award was tainted, and the pursuer only received a sum which was less than one-sixth of the total awarded.

47 For these reasons I do not consider that the adjudicator's decision in this case is severable.”

[26] Working Environments Ltd v Greencoat Construction Ltd was decided on 17 April 2012. Working were mechanical subcontractors of Greencoat, who were the main contractors. Working issued interim application No. 10, and Greencoat issued a payment certificate and notice of withholding payment in response. The interim certificate certified lower sums for measured work and variations than Working claimed. The payment withholding notice sought to set off a total of £67,412.93 for nine items of defective or omitted work, and it stated that liquidated damages in a sum to be confirmed also required to be set off. Working served a notice of adjudication which identified the dispute as being over interim application no 10, interim certificate no 10, and the payment withholding notice. 22 days later Greencoat sent Working a letter purporting to supersede “the costs withheld in Payment Certificate 10”. The letter listed the previous nine items of defective or omitted work, but it also stated that two further items were to be set off (£9,629 for defective work to pumps and £11,520 for failure to perform work related to BREEAM (Building Research Establishment Environmental Assessment Method) obligations) and that the liquidated damages to be set off were £120,000. Greencoat submitted to the adjudicator that at the date of the notice of adjudication there had been no crystallised dispute because payment was not yet due; and that if he had jurisdiction over a dispute that dispute did not extend to the two further items and the liquidated damages of £120,000. The adjudicator decided that he had jurisdiction to adjudicate upon all of the matters referred. He held that the net sum due to Working was £250,860. He rejected Greencoat’s set off of liquidate damages and the two further items on the basis that “no supporting evidence was adduced”. He ordered that Greencoat pay 65% of his fee. Working sought to enforce the award. Greencoat maintained the same jurisdictional challenge as had been advanced before the adjudicator. Akenhead J held that at the time of the notice of adjudication there had been a crystallised dispute and that the scope of the dispute included the issue of liquidated damages, but not the two further items:

 

“32. ... These two items were not part of or within the confines of the dispute as it had crystallised as they had not been mentioned before they emerged 22 days into the adjudication process ... The adjudicator therefore had no right to adjudicate upon those two items because he had no jurisdiction to do so.

  1. The question therefore arises as to whether the remainder of his decision can be enforced. Items 11 and 12 were put forward in the sums of £9,629 and £11,520, which total £21,149, to which, based on the adjudicator's accounting approach, VAT of 20% should be added, bringing the final total to £25,378.80.”

Earlier in the judgement Akenhead J had observed:

 

“The Law ...

  1. In relation to severance, that is whether parts of an adjudicator's decision may be enforced and others not, the Court in Cantillon v Urvasco, gave some guidance:

[paragraph 63 of the judgment in Cantillon was then was set out].

In my view, this reflects the policy of the 1996 Act in that adjudication decisions are to be binding on the parties pending final resolution of the given disputes.”  

 

His decision and reasons on the severance in the instant case were set out at paragraphs 34 - 36:

 

“34. I see no good reason why the substance of the adjudicator's decision should not be enforced albeit that the amended decision relating to the sum of £250,860 plus VAT should be reduced by £21,149 plus VAT which would produce a net sum of £229,711 plus VAT which remains as the figure due at 14 January 2012. Since he did not have jurisdiction to reject or accept Items 11 and 12, he had no jurisdiction to produce a decision which adjudicated upon them. It follows that in principle Greencoat was entitled to put forward as at 14 January 2012 set offs in respect of Items 11 and 12. Effectively, what the adjudicator did was, doubtless with good intentions, to decide upon two further disputes (Items 11 and 12) which were not within his jurisdiction. The Court is therefore enforcing the large bulk of the adjudicator's decision; to do so is consistent with the authorities set out in the Cantillon v Urvasco case

  1. Given the impact of Paragraph 23 (2) of the Scheme, accepted to be applicable here, the decision of the adjudicator effectively declaring what was payable as at 14 January 2012 was binding on the parties as from 29 February 2012 and Greencoat was therefore required to comply with that decision by paying all such amounts as were within the jurisdiction of the adjudicator to decide. It follows therefore that Greencoat is required now to pay £229,711 plus VAT, totalling £275,653.20 plus 65% of the adjudicator's fee, namely £15,678. This totals £291,331.20.

Decision

  1. There will be judgement in favour of WE against Greencoat in the sum of £291,331.20...”

[27] Beck Interiors Limited v UK Flooring Contractors Limited was decided on 4 July 2012. UK Flooring were flooring subcontractors. Beck were the main contractors. Beck served a notice of adjudication. The notice described the dispute as being whether Beck had been entitled to terminate the subcontract; and whether Beck’s claim for £67,148.97 plus VAT and interest was justified. That sum was made up of £31,148.97 for the costs of completion of the subcontract works and £36,000 liquidated damages. The adjudicator decided that Beck had been entitled to terminate the subcontract because of UK Flooring’s breach; and that it was entitled to completion costs of £19,763.41 plus VAT and liquidated damages of £33,600 plus VAT with interest (including £100 under the Late Payment of Commercial Debts (Interest) Act 1990). The adjudicator found UK Flooring “primarily liable” for the entirety of his fees and expenses. When Beck sought to enforce the decision UK Flooring argued that the liquidated damages claim had not been a crystallised dispute when the notice of adjudication was served. Akenhead J agreed. He held that the adjudicator had not had jurisdiction in relation to that claim (paragraph 31). He required to decide whether the adjudicator’s decision could be severed. Earlier in the judgment he had discussed the law on severance:

 

“The Law ...

  1. The next legal issue is whether or not the Court can enforce part of an adjudicator's decision. In the Cantillon case, the Court looked at this “severability” issue and concluded:

 

[para 63 of the judgment in Cantillon was set out]

  1. The Court needs to bear in mind that there are many different types of jurisdictional challenge. They include issues as to whether a dispute has crystallised, whether two disputes have been referred to adjudication, whether the adjudicator has been properly appointed