Lorraine Lee v Chartered Properties (Building) Limited
Case reference:
[2010] EWHC 1540 (TCC)
Friday, 25 June 2010
Key terms: Delivery of decision – timing of the notice of adjudication – settlement – crystallised dispute – multiple disputes – breach of natural justice
Ms Lee engaged Chartered to carry out refurbishment works on the basement and ground floors at a residential property. Chartered completed the works, and submitted its final account. Ms Lee disagreed with the final account, and instructed the architect to discuss this with Chartered. In mid-2009, the parties exchanged email correspondence which set out that the parties were to agree to drop claims they each had against the other. An email from Chartered stated that the parties should exchange formal letters to this effect, which did not take place.
Subsequently, Chartered purported to refer the final account dispute to adjudication. After two abortive adjudications, Chartered commenced a third adjudication. The Adjudicator awarded Chartered a total of £73,982.38. Ms Lee did not pay the amounts awarded and commenced proceedings in the TCC. Chartered counterclaimed for the enforcement of the Adjudicator’s decision. Ms Lee resisted enforcement on six grounds: that the appointment of the Adjudicator was invalid; no dispute had crystallised; Chartered had referred more than one dispute; the dispute between the parties had been settled; there was a breach of natural justice by the Adjudicator; and that the Adjudicator issued his decision out of time.
The judge decided that the decision should not be enforced, because the Adjudicator did not deliver his decision as soon as possible after he had reached his decision. The parties had agreed that the Adjudicator could issue his decision by Friday, 13 November 2009. On 2.48pm on 13 November, the Adjudicator advised he had now reached his decision but it would be issued on Monday. Chartered consented to this timing, but Ms Lee did not. The judge considered that 74 hours was not necessary for typing and proof reading a decision:
“There seems to be no obvious good reason why with some effort and application the decision could not have been communicated on 13 November; there is no obvious explanation as to why virtually the whole of the working day of 16 November was required before the Decision was sent out.”
The judge also decided that Ms Lee had demonstrated that there were other triable issues which could not be decided by way of summary judgement. Firstly, the judge had found that there were factual discrepancies in the account given by Chartered, as to whether or not the notice of adjudication had been delivered to the nominating body prior to the application for nomination. Chartered should be given the opportunity, at trial, to explain the discrepancies. Secondly, that the email correspondence in mid-2009 may have resulted in a settlement of the dispute. The surrounding circumstances of the emails needed to be explored, and this was not something that could or should be performed at a summary judgement application.
The remaining grounds were dismissed by the judge. The judge considered that the dispute had crystallised by the time the adjudication was commenced. Chartered had submitted its final account, and the architect had not issued a final certificate for that amount. In fact, 8 months later, the architect issued an interim certificate for approximately £62,000 less. This demonstrated to the judge that a dispute had crystallised.
The judge did not consider that more than one dispute had been referred. Whilst Ms Lee had submitted that the notice of adjudication raised multiple disputes, such as extensions of time and the failure of the architect to issue written instructions, the underlying dispute was how much, if anything, was owed to Chartered pursuant to its final account. Parliament had intended that the word “dispute” should be construed broadly.
Finally, the judge did not consider that there had been a breach of natural justice by the Adjudicator. Ms Lee had stated that the Adjudicator breached the rules of natural justice by not considering her jurisdictional challenges. However, the judge noted that the Adjudicator did not have authority to decide on his own jurisdiction. Further, Ms Lee had submitted that she was ambushed, and the Adjudicator should have stepped down. The judge decided that this was not the case as there was clearly a significant and long standing dispute.