Comment What is uncertain from the case reports so far available and in the absence of a transcript of the judgment, is why Mr Judkins evidently decided the JJC email was not an effective pay less notice. There is at least a respectable argument that it was responsive to the payment notice and would convey the necessary intention to act as such a notice to a reasonable recipient (see Surrey and Sussex Healthcare 24 ). Whilst peculiar to its facts, the decision illustrates again the complexities of the payment provisions of the Act and the differences of view that can arise in applying them to any given factual situation. 10. Procedure—use of CPR Part 8 in adjudication cases See Merit Holdings Ltd v Michael J Lonsdale Ltd 25 The Defendant (“MJL”) was engaged as mechanical services sub-contractors by the Claimant (“Merit”) for construction operations at One Angel Court, Copthall Avenue, London. Merit commenced two adjudications seeking payment of considerable sums for its work, and then MJL started a third adjudication which lead to the present Part 8 Claim in which Merit sought a declaration “as to the correct interpretation of the contract”. The parties’ initial contractual relationship was set out in a letter of intent dated 20 November 2015 sent by MJL to Merit and providing that MJL would “….reimburse [Merit] the costs wholly and necessarily incurred…pursuant to this letter up to a maximum sum of £330,000.00” A further letter of intent was sent on 16 February 2016 (incorrectly dated 2015). It was in the same terms as the first letter of intent except that the date of expiry was given as Thursday 29 February 2016. Yet a further letter of intent was sent on 6 April 2016, again in the same terms as the first letter of intent, except that (i) the capped value or maximum sum referred to was £430,000 and (ii) the date of expiry was Friday 29 April 2016. It was Merit’s case, that these letters of intent were the basis of the parties’ contractual relationship as varied by conduct after 29 April 2016. Work continued until 12 July 2016. Merit made seven applications for payment, roughly on a monthly basis. Each application was based on Merit’s Tender Summary and assessment of percentage complete against each item. The Tender Summary aligned with a Quantified Schedule of Rates (QSOR) which was provided by Merit under cover of an e-mail dated 3 May 2016. Thus applications were neither made nor paid on the basis of costs wholly and necessarily incurred and the amounts concerned were well in excess of the capped figure (as amended). In July 2016 MJL terminated the arrangement between the parties and a dispute arose about payment of Merit’s application no. 7 dated 22 June 2016. Merit commenced
Ms Milligan decided that since the March 2016 application was an effective “claim by the payee” for the purposes of paragraph 12 of the Scheme, JJC had no right to submit a default payment notice in April. Section 110B(4) of the Act provided that an unpaid party could not issue a second payment notice where the contract provided or allowed the payee to submit an application for payment, and such an application had already been made. There followed a second adjudication, which was aborted. JJC then began adjudication no. 3 in which Mr Judkins was appointed adjudicator. The dispute referred now was based on the premise that JJC’s March payment application was an effective payment notice in which case in the absence of a payment or pay less notice from Eagle, the sums set out in the March payment application became the sums due and payable. The three issues for Mr Judkins were: 1) Whether the decision of Ms Milligan (that the April notice was not a valid payment notice) was binding on him. He decided it was and even if it was not binding on him, he would have arrived at the same decision as she had. 2) Whether the earlier March payment notice was a valid payment notice, which he decided it was. 3) Whether Eagle’s email in response was a valid pay less notice which he decided it was not. Eagle did not pay the resulting award and JJC commenced enforcement proceedings. Eagle advanced several ‘ingenious’ arguments which Jefford J dismissed in short order, holding that a) JJC had sufficiently raised the issue whether the March 2016 claim was “a claim by the payee” in adjudication no. 3. b) The dispute referred in Adjudication no. 3 was not the same as that referred in Adjudication no.1 – the former having been based on the April notice and the latter on the March notice. c) This was not a “Henderson v. Henderson impermissible bite of the cherry”. There was no abuse of process. In adjudication, unlike litigation, only one dispute could be referred at the same time. Adjudication no. 1 was commenced on a limited basis and concerned only the April notice. Adjudication no. 3 concerned the March notice and was not an attempt to re-litigate the same dispute. The judge also considered that Mr Judkins was right to conclude that he was bound by Ms Milligan’s decision and finding that the March notice was an effective notice under section.110B(4) and noted, with apparent approval, that he agreed with finding. The judge also dismissed Eagle’s argument for JJC to succeed it had to rely on the decisions in both adjudications no. 1 and no. 3. The position was simple: it was an application to enforce the decision and the sum of money found due in adjudication no. 3.
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