J Murphy & Sons Ltd v W Maher and Sons Ltd (TCC - 23.5.2016)
The sub-sub-contract provided for any dispute “under or in connection with” the contract to be referred to adjudication. The sub-sub-contractor submitted its final payment application (no 21) for a gross sum with a net sum said to be due. Correspondence and telephone calls culminated in the sub-sub-contractor alleging that an agreement had been reached on a “final account sum”. The sub-contractor denied that its representative entered into that agreement. The sub-sub-contractor served a notice of adjudication pursuant to the sub-sub-contract’s adjudication provisions, which included the TCC as the nominating body, but applied to the RICS to appoint the adjudicator, which it did. The sub-contractor responded by challenging the adjudicator’s jurisdiction on the basis that the inclusion of the TCC as the nominating body in the sub-sub-contract’s provisions meant that they were deficient with the result that the Scheme for Construction Contracts applied in their place. The sub-sub-contractor took what it described as a “pragmatic” approach by serving a second notice of adjudication and again applying for the appointment of an adjudicator to the RICS but this time referring the dispute pursuant to the Scheme.
Sir Robert Akenhead made a declaration that the dispute as to the validity and effect of the alleged settlement agreement which was the subject of the sub-sub-contractor’s second notice of adjudication could be referred to adjudication by the (same) adjudicator appointed by the RICS (pursuant to both notices) under the sub-sub-contract’s adjudication provisions (pursuant to the first notice) or under the Scheme for Construction Contracts (pursuant to the second notice).
The sub-sub-contract’s adjudication provisions permitted the reference to adjudication of any dispute not only “under” but also “in connection with” the contract. The sub-contractor accepted that if the sub-sub-contract’s adjudication provisions applied, the dispute as to the validity and effect of the alleged settlement agreement clearly arose “in connection with” the contract. The fact that the sub-sub-contract’s adjudication provisions wrongly specified the TCC as the adjudicator nominating body (since that court did not provide such a service) did not render them void (so that the Scheme for Construction Contracts applied in their place) by reason of those provisions therefore not complying with the requirements for adjudication under section 108(1) to (4) of the Construction Act.
The alleged agreement was in effect a variation of the sub-sub-sub-contract by substituting a figure as due for whatever else was due by way of resolving a claim under the sub-sub-contract (payment application 21) and would be referable to adjudication “under” the sub-sub-contract. If the alleged agreement was simply confirming the sum actually due under the sub-sub-contract with the result that there might be no consideration and no binding settlement contract, the claim that it was binding would be referable to adjudication “under” the sub-sub-contract.