Harding v Paice (CA - 1.12.2015)
The contractor brought and was successful in two adjudications in respect of interim payments due. The contractor sent his final account pursuant to clause 8.12.3 and began a third adjudication on the basis that the homeowners were obliged to pay the sum claimed in the absence of an effective pay less notice or that the sum claimed was properly due under clause 8.12. The adjudicator in the third adjudication awarded the sum claimed on the basis that (i) The homeowners’ pay less notice was invalid and (ii) It was therefore not necessary to decide whether the sum claimed represented a correct valuation of the works. The contractor commenced enforcement proceedings and the homeowners paid the sum awarded. The homeowners sought to begin a fourth adjudication to determine the true value of the contractor's final account. The contractor began the present proceedings to stop the fourth adjudication from going forward on the basis that the issues in the fourth adjudication had been decided in the third adjudication. Edwards-Stuart J declined to order such relief on the basis that the adjudicator in the third adjudication decided that the homeowners were obliged to pay the sum claimed because they had failed to serve a compliant pay less notice. The fourth adjudication proved abortive because of the adjudicator’s apparent bias. The homeowners maintained that the decision of Edwards-Stuart J entitled them to launch a fifth adjudication in order to challenge the contractor's account under clause 8.12 and appealed against it while the fourth adjudication was still in progress.
The Court of Appeal held that (i) Edwards-Stuart J was right to refuse to grant injunctive or declaratory relief to the contractor so as to restrain the homeowners from proceeding with the fourth (abortive) adjudication to determine the sum properly due to the contractor on his final account as a matter of valuation following the contract’s termination and (ii) The homeowners should not be restrained from proceeding with the proposed fifth adjudication.
Jackson LJ in giving his reasons for the decision stated that the adjudicator in the third adjudication decided a different issue to that which the homeowners were intending to refer in the proposed fifth adjudication as a matter of construing the adjudication and referral notices and the decision in the third adjudication.
The dispute referred in the third adjudication was what sum was due to the contractor on its final account. The adjudicator could have got to his answer that the contractor was entitled to the sum he claimed in his final account by (i) The contractual “short route” by concluding that the homeowners had not served a valid pay less notice with the result that the employer was obliged to pay the total sum shown on the final account or (ii) The valuation “long route” by concluding that the contractor was entitled to the sum claimed by carrying out an analysis of the evidence and submissions on all the valuation issues.
On a proper analysis of the notice of adjudication and the referral document in the third adjudication and of the adjudicator’s decision in the third adjudication (i) The contractor referred a dispute involving two alternative issues by requesting the adjudicator to take either the short or the long route in finding that the sum he claimed on his final account was due and (ii) The adjudicator took the short route with the result that he awarded the sum claimed by the contractor as the sum due.