11. Summary Award-enforceability-use of part 8 proceedings-error of law
Nothing in the Act, Scheme or contract prevented the employer doing what the contractor could do: attacking the sum stated as due in a notice. Finally, nothing in section 110A, section 110B and section 111 of the Act, drew any distinction between an interim and a final certificate. They applied to both. Thus whether what was in dispute was an interim or final payment, the employer had the right in principle to refer to adjudication a dispute about the ‘true’ value. It was then necessary to review existing authorities to see if they compelled a different conclusion. On the face of it the very question now raised was answered by Jacob LJ in Rupert Morgan 22 when he said that although in the absence of a withholding notice the employer had to pay the sum certified, that did not preclude the employer “from subsequently showing he was overpaid. If he is overpaid on an interim certificate the matter can be put right in subsequent certificates. Otherwise he can raise the matter by way of adjudication or if necessary arbitration of legal proceedings.” Rupert Morgan was binding and made good sense. The Court considered two previous decisions in ISG v Seevic 23 and Galliford Try v Estur 24 which Edwards-Stuart J “took a different line” and found itself unable to follow them. In so doing Coulson J observed that the value should not be deemed to be agreed merely by virtue of the absence of an effective payment or pay less notice. Thus an employer whose payment notice or pay less notice was deficient or non-existent could pay the contractor the sum stated to be due in the contractor’s interim application but was then free to commence adjudication proceedings to dispute that the sum paid was the “true” value of the works for which the contractor had claimed. Comment This decision limits the time effects of so called “smash and grab”. An employer who for lack of notice is found liable to pay a greater sum than his own valuation, can pay up and in principle immediately adjudicate the true value of an interim as well as a final payment application. In an appropriate case, he might even seek a stay of execution in the meanwhile. It may be that the effect of this decision will be to reduce the number of “smash and grab” adjudications. The reference to the judgment of Jacob LJ in Rupert Morgan is interesting for another reason. It will be recalled that Jacob LJ said an overpayment could (also) be put right in a subsequent certificate. The question which remains to be answered is whether, instead of adjudicating, a paying party can adjust the value in a subsequent certificate or valuation and effectively reclaim the overpayment?
See Seadown Developments Ltd v SMCC Construction Ltd The increasing use of part 8 proceedings was recognised so long as it was within the circumstances set out in TCC guide 9.34 and was being used to determine fundamental points of principle as set in the case of Hutton. Costs-jurisdiction See PFG Design Ltd v Masma Ltd (and below) The Court declined to determine whether the adjudicator had been entitled to award a small amount of fixed costs under the LPA. Enforcement-interest See Actavo UK Ltd v Doosan Babcock Ltd On the facts it could not be said a rate of interest of 1% above base was not a substantial remedy. The court could not determine the issue in the Part 8 proceedings without further evidence. Enforcement-set off of one decision against another See Actavo UK Ltd v Doosan Babcock Ltd The first decision was valid and enforceable. There were question marks over the validity of the second decision. Judgment was given on the first decision and payment of part of the judgment sum was ordered to be made in 7 days with the balance after 28 days to allow the Part 8 proceedings to be concluded. Jurisdiction—adjudicator entitled to decide date and terms of oral contract See PFG Design Ltd v Masma Ltd (and see above) The adjudicator was entitled to decide whether and if sowhen an oral contract was entered into and where it post dated October 2011 and it was clear jurisdiction was founded, he was entitled to proceed to determine the particular terms and therefore the dispute. Jurisdiction-excluded operation-reservation of rights See Equitix ESI CHP (Wrexham) v Bester Generacion UK Ltd Although section 104(5) referred to the agreement, what mattered for the purpose of jurisdiction was whether or not some part of the dispute referred to the adjudicator related to or arose out of excluded operations. A general reservation would be looked on with disfavour if its purpose was to try and cover every possible eventuality. In any case a general reservation must be made in a clear and open way. Successive adjudications required successive reservations.
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