Oak pursued its claim for payment of £430,000 at adjudication. OD raised two jurisdictional challenges. First, OD said the adjudicator’s appointment was invalid because it was not made in accordance with the adjudication provision of the JCT terms which were incorporated in the LOI albeit the method of appointment (by RICS) was correct. Second OD said its Final Payment Notice was itself conclusive at the outset and, therefore, there was no true dispute. The adjudicator dismissed the objections. He went onto find that even though no subcontract had been executed, the parties had contracted on the basis of the JCT terms and those terms were applicable to the claim for payment. Applying the JCT terms of payment he awarded Oak £430,000.
Jurisdiction
The court was asked by OD to look at the same two challenges it has raised before the adjudicator. The court looked at the notice of adjudication, and the way the adjudicator had been appointed. Whilst the notice of adjudication did not refer to the LOI, Oak had served its notice and appointed the adjudicator in accordance with the procedures in the LOI. This was not a case like Twintec[8] where the adjudicator was appointed under a contractual provision that did not exist. Here the appointment was consistent with and gave effect to the provision in the LOI. OD’s position crossed into a formalisation that did not sit well with the adjudication regime and thus their first objection failed. On OD’s second objection, the fact that its Final Payment Notice might have had conclusive effect had the JCT terms applied, did not deprive the adjudicator of jurisdiction. The contention as to conclusive effect raised an evidential not a jurisdictional bar – Oak would not be able to adduce any contrary evidence in relation to relevant matters. In any event Oak’s position had been that the Notice was invalid and that the JCT terms did not actually apply. It would be absurd if OD’s mere claim it was entitled to rely on the Final Payment Notice was sufficient to deprive the adjudicator of jurisdiction.
OD came to court for a declaration under Part 8 CPR that:
the LOI had incorporated the JCT terms from the start, its Final Payment Notice was valid per the JCT terms because Oak had failed to challenge the Final Payment Notice within 10 days as provided for by the JCT terms it had become conclusive as to the sum due. Oak then issued an application for summary judgment saying the adjudicator had jurisdiction on the basis of the adjudication provisions of the LOI. They argued that the JCT terms were not incorporated, so that the OD’s Final Payment Notice was of no effect and it was Oak’s payment notice which governed the right to payment. OD countered that if Oak was right and the JCT terms did not apply, the result was that the adjudicator had no jurisdiction because he had evaluated Oak’s claim on the premise that those terms did apply.
[8] Twintec v Volkerfitzpatrick Lyd [2014] EWHC10 (TCC)
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