The Facts

Matthew Harding (trading as MJ Harding Contractors) (the “Contractor”) agreed to construct and fit out two residential houses at a site in Purley, Surrey for Gary George Leslie Paice and Kim Springall, who were property developers (the “Employer”), under an amended JCT Intermediate Building Contract, 2011 Edition (IC11) (the “Contract”).

Work started in April 2013 but, by September 2013, the parties' relationship had deteriorated. On 18 September 2013, the Employer purported to terminate the Contract, alleging that the contractor had failed to proceed regularly and diligently with the works. The Contractor rejected this, arguing that it was ahead of schedule and being prevented from progressing because the employer had failed to appoint a replacement architect.

On 30 November 2013, the Contractor gave notice under clause 8.9.2.2 that it was suspending the Contract works.

On 3 January 2014, the Contractor gave notice of termination of its employment under clause 8.9.3 and, pursuant to clause 8.12.3, on 8 August 2014, it submitted an account for its work in the sum of £797,859.49, with £397,912.48 plus VAT due for payment by the 6 September 2014.

Prior to September 2014, the parties engaged in two adjudications on matters that were irrelevant to this dispute.

The third adjudication

The Contractor started the third adjudication on 1 September 2014 and argued that the Employer failed to serve a Pay Less Notice, in accordance with paragraphs 9 and 10 of the Scheme for Construction Contracts (the “Scheme”), by 30 August 2014 and asked the adjudicator to declare it was entitled to the sum of £397,912 plus VAT or alternatively such other sum that the adjudicator shall decide.

In his decision dated 6 October 2014, the third adjudicator:

(i) observed that far from being an “open and shut” adjudication, he had to decide who had terminated the Contract. The adjudicator resolved this issue in favour of the Contractor;

(ii) decided that the Employer had not issued a valid pay less notice, for the principal reason that it did not specify the basis on which the sums set out in it was calculated and that the Contractor was entitled to payment of £397,912 plus VAT;

(iii) stated that he had not addressed the merits of the Contractor's valuation, albeit the parties had made submissions about the proper valuation, because the lack of a pay less notice meant that the notified sum was automatically due.

The fourth adjudication, enforcement and injunction proceedings

Since, the Employer did not pay the sum awarded by the third adjudicator, on 10 October 2014 the Contractor issued enforcement proceedings against Employer.

On 14 October 2014, the Employer commenced the fourth adjudication in which it sought a decision that the value of the Contract works carried out by the Contractor to be in the sum of £340,032.60.

Following notification of the fourth adjudication, the Contractor made an application for an injunction on two grounds:

(i) that the Employer has acted unreasonably and/or oppressively by starting the fourth adjudication without complying with the decision of the third adjudicator; and

(ii) that the adjudicator in the fourth adjudication does not have jurisdiction to decide the dispute because that dispute is the same or substantially the same as that already decided in third adjudication.

On 29 October 2014, Mr Justice Edwards-Stuart granted a short interim injunction until 4 November 2014 to allow the Employer time to pay the sums awarded by the third adjudicator, for it had agreed to pay by 3 November 2014. The parties had also reached an agreement on costs.

The Decision

In refusing to grant the injunction sought, the Judge:

(i) rejected the Contractor's argument that the third adjudicator had determined the amount properly due in respect of the contractor's account and rejected the suggestion the lack of a pay less notice would always prevent the employer from challenging the Contractor's account, even in subsequent court proceedings;

(ii) found that the fact that the third adjudicator had only made a decision on the Pay Less Notice argument meant that alternative case could be referred to another adjudicator;

(iii) held that under paragraph 9(2) of the Scheme, an adjudicator only had to resign if the dispute referred to him was the "same or substantially the same" as a previous dispute that had been decided;

(iv) held that the Contractor’s argument was not supported by the authorities in Quietfield v Vascroft [2006] EWCA Civ 1737, where May LJ said that what was important was that the second adjudicator was not asked "to decide again that which the first adjudicator has already decided". If the situation were otherwise, a party could refer a number of questions or issues to adjudication under the umbrella of one dispute, invite the adjudicator to decide only one or two of them, knowing this would shut the door to the other party from subsequently referring the undecided issues to another adjudicator;

(v) observed that clause 8.12.5 is "a curious provision" because it does not require the employer to pay the amount stated in the Contractor's account. Instead, it provides that the employer is to pay "the amount properly due in respect of the account" within 28 days. That suggested the amount payable may be different from the amount stated in the contractor's account;

(vi) concluded that the third adjudicator had decided that, if the employer wished to pay less than the sum in the contractor's account, it had to serve a pay less notice. In the absence of such a notice, the employer had to pay the amount claimed. (The Judge expressed no opinion on whether an account given under clause 8.12 required a pay less notice.)

(vii) held that the third adjudicator had not determined the amount "properly due" to the contractor under clause 8.12.5. He had simply found that the lack of a pay less notice meant the sum claimed had to be paid. The absence of a pay less notice could not convert a sum that was not "properly due" into one that was "properly due";