You're asking for it

Adjudicators can only do what they are asked to do, so if you don't get the wording right in the "notice of intention to adjudicate"*, you're likely to come unstuck

"The lesson here is to ensure the 'notice of intention to adjudicate'* states the figure owed, and adds the line ‘or such other sum as the adjudicator shall find is due’"

Here are two adjudication decisions that found their way into the High Court. Holt Insulation Ltd vs Colt Ltd is number 51 in our series. By the way, a full list of adjudication decisions can now be found at www.tonybingham.co.uk/adjudication.

Holt Insulation subcontracted work at Rugby to Colt, which made in total 10 interim applications for payment. There was a quarrel about the amount due to Colt under the last of these. Colt said it was due £110,556.56. An adjudicator called Colin Little was appointed by the RICS. He is well respected in this line of business; he knows his QS adjudication valuation work. Little had no trouble in calculating what was due to Colt. He said it was not that sum, so Colt got nothing. Easy.

Undaunted, Colt tried again. It gave "notice of intention to adjudicate", saying it was entitled to interim number 10 – or such other sum the adjudicator should find was due. Little was appointed again, which made good sense. He had behaved impeccably in the first adjudication. Even Colt was not fed up with him, since by now it saw that his answer in the first adjudication was sound. But Holt got upset. It told the adjudicator he had already been asked by Colt to deal with interim 10 and had done so. In which case, the matter was all over and goodnight. He had, it said, no jurisdiction to revisit his decision.

Have you spotted the difference between the two adjudications? The first asked if £110,556.56 was due under interim 10. The second asked what sum was due. These are two completely different questions. Therefore, Little was asked to do two different jobs and therefore, he did have jurisdiction. He had already worked out that Colt was entitled to £72,939.56, but had no power under the first adjudication to say so. The lesson here is to ensure that the notice of intention to adjudicate states the figure said to be owed, and adds the line "or such other sum as the adjudicator shall find is due".

The next case is LPL Electrical Services Ltd vs Kershaw Mechanical Services Ltd. I am obliged to solicitor Laurence Cobb of Taylor Joynson Garrett for sending me the judgment. He points out how it gives a clear indication to the construction industry that the wording in the "notice of intention to adjudicate" is absolutely crucial to the eventual enforcement of an adjudicator's award.

Cobb is properly pointing out that it is that piece of paper that sets out what the adjudicator is being asked to do – this sets the scope of the adjudicator's jurisdiction.

The LPL case is similar to Holt vs Colt. This time the notice of intention to adjudicate said: "The referring party has submitted applications for payment for work completed under the contract. The responding party has not made payment for interim number eight. The referring party claims the payment of £70,162.17 in accordance with interim number eight, if not what sum is to be paid [meaning: or other such sum that is due]." The unusual wording of the contract payment mechanism, if properly interpreted, meant that although payment applications were cumulative in the usual way, the amounts applied for were not. So, an amount due on application eight was less the amounts due under previous application. The contract does not say the amount due under application eight is less "payments previously made". Do you see the subtle difference? The adjudicator, I think, approached the problem in the traditional way. He established the gross amount due under interim eight and announced that that sum be paid less previous payments. I bet most adjudicators would do the same.

Kershaw said the adjudicator had no jurisdiction to calculate the amount in this way. He had jurisdiction only to announce the amount due under application eight. It resisted enforcement. But the judge in the High Court ordered Kershaw to obey the decision. The reason was that the adjudicator was construing the meaning of the contract when deciding what was payable, and whether he was right or wrong, the court must give effect to his decision until a trial or arbitration on the amounts due under application eight is fully heard out. An error of law or interpretation was not outside jurisdiction.

*Note: there was an error in the printed version in "Building" which wrongly referred to "the referral notice".

Readers are invited to forward recent judgments for reporting in this column (with full acknowledgement) to: Tony Bingham, 3 Paper Buildings, Temple, London EC4Y 7EU. DX:007I LDE

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