Hillcrest engaged Beresford & Curbishley (“B&C”) under a JCT D&B Contract (“Contract”) to design and construct a residential property in Prestbury. The Contract contained the standard wording that if “any dispute or difference arises under the Contract” it could be referred to adjudication under the Scheme. Before entering into the Contract, Hillcrest had engaged structural engineers. The Employer’s Requirements provided that the engineer’s appointment would be novated to B&C. The engineer was reluctant to sign the novation agreement, although it did eventually in October 2012. Practical Completion had been achieved in September 2012.

B&C commenced adjudication proceedings against Hillcrest seeking declaratory relief relating to the failure to novate the structural engineer’s appointment. The adjudicator decided (amongst other things) that (i) Hillcrest had made a negligent misstatement regarding novation; (ii) the negligent misstatement was a misrepresentation that entitled B&C to recover damages but not loss and expense; and (iii) the novation agreement was void and the structural engineer’s appointment had not been novated.

Hillcrest commenced CPR Part 8 proceedings seeking declarations that (i) the adjudicator’s decision was unenforceable because (a) the claims for negligent misstatement and misrepresentation were outside the ambit of the Contract’s adjudication provisions; (b) more than one dispute was referred to adjudication; and (c) the adjudicator had breached the rules of natural justice; and (ii) B&C pay damages for breach of contract, which it committed when it referred a dispute to adjudication which was outside the ambit of the Contract’s adjudication provisions.

The judge decided that:

(i) the claims for negligent misstatement and misrepresentation were outside the ambit of the Contract’s adjudication provisions because they did not arise under the Contract but under the law of negligent misstatement or under the Misrepresentation Act 1967 (“Act”) and so the adjudicator did not have jurisdiction to deal with them;

(ii) B&C had referred more than one dispute to adjudication: (a) a dispute relating to negligent misstatement and the Act; and (b) a dispute as to whether there had been an effective novation of the structural engineer’s appointment to B&C (this dispute did fall within the ambit of the Contract’s adjudication provisions);

(iii) the adjudicator’s decision that the novation agreement was void was not based on legal arguments advanced by the parties and so the adjudicator had breached the rules of natural justice;

(iv) Hillcrest was not entitled to damages: it was not a breach of contract to refer a dispute to adjudication that fell outside the ambit of the Contract’s adjudication clause nor was there an implied term that the parties would only refer a dispute to adjudication that fell within the ambit of the Contract’s adjudication clause.