The claimant, Penten Group Ltd applied to the court under CPR 8 for declarations that the first adjudicator’s decision was enforceable and fourth adjudicator did not have jurisdiction to decide the matters set out in the defendant’s notice because the first adjudicator had already decided those matters.

The defendant, Spartafield Ltd argued the contractor's declaratory relief application should be denied and the first adjudicator's decision relating to the letter of intent should be severed as it was arguable that the letter of intent did not provide a valid basis for payment.

Mr Justice Coulson granted declaratory relief to the effect that the parties were bound by the first adjudicator's decision regarding the letter of intent. This meant their construction contract was governed by the terms of a letter of intent, and not a JCT Intermediate Building Contract with contractor's design, 2011 Edition. However, the Judge declined to make the declaration with regard to the alleged lack of jurisdiction in any future adjudication.

Mr Justice Coulson held that it would not have been possible for the adjudicator in the first adjudication to “decide whether or not there was a valid contract without deciding whether basic terms had been agreed and, if so, what precisely those terms were” because a valid contract can only come into existence if there is agreement between the parties on certain basic matters.

In the first adjudication, the defendant had argued that the letter of intent governed the parties' relationship, “in other words, the letter of intent was "in play" from the start”.

A party cannot artificially restrict a responding party's defence by arguing that because it (the referring party) made no reference to a particular point in the notice of adjudication, that point “cannot arise for decision” (Pilon Ltd v Breyer Group plc [2010] EWHC 837 (TCC).

The Judge noted that the defendant’s alternative argument that the parties had entered into “a simple contract that was not the ICD, but was not the letter of intent either” had not been put to the first adjudicator. This meant that it is not possible for the defendant to advance this point.

Mr Justice Coulson also argued about a potential jurisdictional challenge, namely that deciding on the “existence of the contract or its precise terms”, as well as the underlying financial claims does not constitute deciding more than one dispute. The Judge held that “…a dispute about terms and a dispute about the claims under those terms are all part of a single dispute. Otherwise the whole basis of adjudication becomes unworkable”, in other words, to decide the financial claims, it is first necessary to decide the contract terms.

This case makes it clear that it would be impossible for an adjudicator to determine whether a valid contract exists without determining the terms of the contract between the parties. Also this case made it clear that, at least in an ordinary case, a dispute about terms and a dispute about claims under those terms are all part of the one dispute.