Matthew Harding (Trading as M J Harding Contractors) v Gary George Leslie Paice and Another

Hearing date: Wednesday 18th November 2015

This judgment is in seven parts, namely:

This is an appeal by a building contractor against a judgment of the Technology and Construction Court ("TCC") refusing to grant either an injunction or a declaration to prevent an adjudication going forward. The central issue in this appeal is whether an earlier adjudication on related matters shuts out the new adjudication.

The appeal is of some general importance. This is because of the crucial role which adjudication plays in the operation of the construction industry.

The employers in this case are Mr Gary George Leslie Paice and Ms Kim Springall. They are defendants in the current litigation and respondents in this court. I shall refer to them as "PS". They are described as "the employer" (singular) in the building contract.

The contractor is Mr Matthew Harding trading as MJ Harding Contractors. He is claimant in the current litigation and appellant in this court. I shall refer to him as "Harding".

PJ English Associates Ltd ("PJE") is a firm of Chartered Quantity Surveyors and Dispute Resolution Consultants, which acted for PS.

Blue Sky ADR Ltd ("BSA") is a firm of construction consultants, which acted for Harding.

I shall refer to the Housing Grants, Construction and Regeneration Act 1996 as "the 1996 Act".Section 108 of the 1996 Act provides:

" Right to refer disputes to adjudication.

(1) A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section.

For this purpose "dispute" includes any difference.

(2) The contract shall include provision in writing so as to—

(a) enable a party to give notice at any time of his intention to refer a dispute to adjudication;

(b) provide a timetable with the object of securing the appointment of the adjudicator and referral of the dispute to him within 7 days of such notice;

(c) require the adjudicator to reach a decision within 28 days of referral or such longer period as is agreed by the parties after the dispute has been referred;

(d) allow the adjudicator to extend the period of 28 days by up to 14 days, with the consent of the party by whom the dispute was referred;

(e) impose a duty on the adjudicator to act impartially; and

(f) enable the adjudicator to take the initiative in ascertaining the facts and the law.

(3) The contract shall provide in writing that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement.

The parties may agree to accept the decision of the adjudicator as finally determining the dispute.

….

(5) If the contract does not comply with the requirements of subsections (1) to (4), the adjudication provisions of the Scheme for Construction Contracts apply."

Section 110A of the 1996 Act (as amended by the Local Democracy, Economic Development and Construction Act 2009) provides:

" Payment notices: contractual requirements

(1) A construction contract shall, in relation to every payment provided for by the contract—

(a) require the payer or a specified person to give a notice complying with subsection (2) to the payee not later than five days after the payment due date, or

(b) require the payee to give a notice complying with subsection (3) to the payer or a specified person not later than five days after the payment due date.

(2) A notice complies with this subsection if it specifies—

(a) in a case where the notice is given by the payer—

(i) the sum that the payer considers to be or to have been due at the payment due date in respect of the payment, and

(ii) the basis on which that sum is calculated;

(b) in a case where the notice is given by a specified person—

(i) the sum that the payer or the specified person considers to be or to have been due at the payment due date in respect of the payment, and

(ii) the basis on which that sum is calculated.

(3) A notice complies with this subsection if it specifies—

(a) the sum that the payee considers to be or to have been due at the payment due date in respect of the payment, and

(b) the basis on which that sum is calculated."

Section 111 of the 1996 Act (as amended by the Local Democracy, Economic Development and Construction Act 2009) provides:

" Requirement to pay notified sum

(1) Subject as follows, where a payment is provided for by a construction contract, the payer must pay the notified sum (to the extent not already paid) on or before the final date for payment.

(2) For the purposes of this section, the "notified sum" in relation to any payment provided for by a construction contract means—

(a) in a case where a notice complying with section 110A(2) has been given pursuant to and in accordance with a requirement of the contract, the amount specified in that notice;

(b) in a case where a notice complying with section 110A(3) has been given pursuant to and in accordance with a requirement of the contract, the amount specified in that notice;

(c) in a case where a notice complying with section 110A(3) has been given pursuant to and in accordance with section 110B(2), the amount specified in that notice.

(3) The payer or a specified person may in accordance with this section give to the payee a notice of the payer's intention to pay less than the notified sum.

(4) A notice under subsection (3) must specify—

(a) the sum that the payer considers to be due on the date the notice is served, and

(b) the basis on which that sum is calculated.

It is immaterial for the purposes of this subsection that the sum referred to in paragraph (a) or (b) may be zero.

(5) A notice under subsection (3)—

(a) must be given not later than the prescribed period before the final date for payment, and

(b) in a case referred to in subsection (2)(b) or (c), may not be given before the notice by reference to which the notified sum is determined.

(6) Where a notice is given under subsection (3), subsection (1) applies only in respect of the sum specified pursuant to subsection (4)(a).

(7) In subsection (5), "prescribed period" means—

(a) such period as the parties may agree, or

(b) in the absence of such agreement, the period provided by the Scheme for Construction Contracts."

The Scheme for Construction Contracts referred to in section 108 (5) of the 1996 Act is to be found in the Schedule to The Scheme for Construction Contracts (England and Wales) Regulations 1998, as amended from time to time. In accordance with convention I shall refer to this simply as "the Scheme".

Paragraph 9 of Part I of the Scheme provides:

"9 – (1) An adjudicator may resign at any time on giving notice in writing to the parties to the dispute.

(2) An adjudicator must resign where the dispute is the same or substantially the same as one which has previously been referred to adjudication and a decision has been taken in that adjudication."

Paragraphs 9 and 10 of Part II of the Scheme provide:

" Payment notice

9.—(1) Where the parties to a construction contract fail, in relation to a payment provided for by the contract, to provide for the issue of a payment notice pursuant to section 110A(1) of the Act, the provisions of this paragraph apply.

(2) The payer must, not later than five days after the payment due date, give a notice to the payee complying with sub-paragraph (3).

(3) A notice complies with this sub-paragraph if it specifies the sum that the payer considers to be due or to have been due at the payment due date and the basis on which that sum is calculated.

(4) For the purposes of this paragraph, it is immaterial that the sum referred to in subparagraph (3) may be zero.

(5) A payment provided for by the contract includes any payment of the kind mentioned in paragraph 2, 5, 6, or 7 above.

Notice of intention to pay less than the notified sum

10. Where, in relation to a notice of intention to pay less than the notified sum mentioned in section 111(3) of the Act, the parties fail to agree the prescribed period mentioned in section 111(5), that notice must be given not later than seven days before the final date for payment determined either in accordance with the construction contract, or where no such provision is made in the contract, in accordance with paragraph 8 above."

I shall refer to a notice served by the payer under paragraph 9 (3) of Part II of the Scheme as...