Mr Horne engaged the first named Defendant ("Magna") to carry out various works at his flat at 53 Tanners Yard, 239 Long Lane, London, SC1 4PT, that the contract sum was £55,000 and that the contract incorporated the JCT Minor Works Building Contract 2011.

There were issues between the parties as to the extent to which these works had been completed. It was asserted that the works were supposed to have commenced on 4 November 2013 with an estimated completion date of 7 December 2013. By 23 January 2014 Mr Horne served on Magna a default notice pursuant to Clause 6.4.1 of the Minor Works Conditions of Contract which was followed by a further notice on 31 January 2014 by which Magna’s employment was purportedly terminated pursuant to Clause 6.4.2, it being alleged that the specified default had not been remedied.

On 10 June 2014, Magna served Notice of Adjudication on Mr Horne. The redress sought was payment of £16,214.88 said to be "the outstanding amount for works completed and invoiced" by Magna and a request that Mr Horne make a payment of adjudicator's fees.

The adjudicator concluded that he had jurisdiction to decide a dispute concerning:

“the validity of [Mr Horne’s] purported termination of [Magna’s] employment under the Contract; and
the extent, if any, to which [Magna] is entitled to payment of what it says is an outstanding invoiced a balance of £16,214.88."

The adjudicator referred to a decision of Mr Justice Coulson in Workspace Management Ltd v YJL London Ltd [2009] EWHC 2017 TCC and he concluded that the jurisdiction is limited to a consideration of the amount, if any, of the "outstanding payment of £16,214.88 which [the Contractor] is due under the contract".

He decided that Magna’s employment was "effectively and properly terminated on 31 January 2014 upon its receipt" of Mr Horne’s solicitors letter of that date. He considered that Magna’s calculation and resulting claim were deficient in a number of respects, for instance the lack of detailed analysis of the value of those elements of the Works which remain to be completed. Against that, he referred to the facts that Mr Horne had prepared an account which purported to satisfy the requirements of Clause 6.7.3 and that this produced a balance due to Mr Horne of £28,468.19. He adjusted this downwards to £27,164.79 in relation to "underpaid agreed variations".

He concluded that Magna’s contractual employment was effectively and properly terminated and that it was not entitled to payment of any part of it is purported invoiced outstanding balance. He directed that Magna should be liable for the full amount of his fees of £4,692.

Magna did not pay the adjudicator’s fees. On 5 August 2014, Mr Horne’s solicitors wrote to Magna referring to the fact that the adjudicator had found but did not award a sum due to Mr Horne but that Mr Horne could initiate a second adjudication to recover that amount. They indicated that Mr Horne would forego his right to pursue such adjudication if the adjudicator's outstanding fees were paid.

Thereafter on 15 September 2014 he issued proceedings against Magna claiming the £4,692 and some related incurred solicitors costs (£240). Additionally, he sought a declaration that the adjudicator did have jurisdiction to award the sum of £27,164.79 and an order that Magna paid that sum together with interest.

Mr Horne issued an application for summary judgement. On 16 September 2014 the Court issued its Order giving directions, amongst others, requiring Magna to serve any evidence which it wished to rely upon. Magna did not serve any evidence or argument but attended the hearing through its director, Mr Postlethwaite.

Mr Postlethwaite accepted expressly at that Magna should honour the decision in relation to the adjudicator's fee and the related solicitor's costs. He argued, albeit without reference to legal authority, that the adjudicator was right to decide that he did not have jurisdiction to award any further sum to Mr Horne. The argument is therefore came down to whether Mr Horne was entitled summarily to a declaration that the adjudicator did have such jurisdiction and that there should be judgement in his favour of the sum of £27,164.79 in consequence.

Mr Justice Akenhead drew a distinction between the Workspace Management Ltd v YIL London Ltd [2009] BLR 497 case and the current case, in that the dispute in the former was in effect a broad one as to what was the proper value of a negative money certificate and the dispute in the current case revolved around what was due to the contractor if the employer had not terminated the contractor’s employment properly.

In the current case, the dispute referred was that which was identified in the Notice of Adjudication which in context reflected the fact that up to that point Magna was claiming that it was entitled to some £16,000 and this was being disputed on the basis that Mr Horne did not have to pay because he had validly terminated Magna’s contractual employment under Clause 6.7.1.2, by which no further sums were payable at least until the accounting had been completed by or on behalf of Mr Horne. By the time of the Notice of Adjudication and initiation of the adjudication, the defence to the claim was simply that Mr Horne did not have to pay because he had validly terminated Magna’s employment under the contract.

Mr Justice Akenhead reasoned that the dispute referred to adjudication did not encompass whether Mr Horne was entitled to a net sum. He said, the adjudicator was, however, entitled to consider the later accounting documentation to determine whether there was or might otherwise be a sum due to Magna and concluded that the adjudicator was right to determine that he had no jurisdiction to award a net sum to Mr Horne.

It was stated, by Mr Justice Akenhead, as important to appreciate that the adjudicator did not actually find that the account was proved: he identified that the account submitted “purports to satisfy” Clause 6.7.3 (which is not a finding that it did actually satisfy the contractual requirements). He did not actually determine that there was a net sum of £27,164.79 due to Mr Horne; there is no reasoned analysis or factual consideration by him of the account. He had, instead, identified some respects in which Magna’s claimed entitlement was unsatisfactory and given at best a broad pointer towards it being likely, that there would have been a net sum due to Mr Horne.

Mr Justice Akenhead went on to state that it was simply not possible, let alone fair, for the Court to form the view that the adjudicator would, if he believed that he had jurisdiction, have decided that £27,164.79 was due to Mr Horne.

It followed that Mr Horne was found not to be entitled to summary judgment for that sum but was entitled to judgment for the adjudicator’s fee and solicitor’s costs, totalling £4,932 plus interest.

It was not challenged by Mr Postletwaite that he should pay the costs. Mr Horrne’s solicitors’ bill ran to £9,103. The judgment was only for £4,932 plus interest so in substance, Mr Horne lost on the major issue of his entitlement to the sum of £27,164.79. In consideration of this, Mr Justice Akenhead determined that an allowance of £3,000 was a proportionate and reasonable allowance for costs, given that Mr Horne had to pursue the case.

Commentary

It is unusual for a claim of this size to be considered by the High Court, in that fees claimed were less than £5,000.00 (along with the application for declaratory relief). In a case where the legal fees amounted to £9,103.00, of which only £3,000.00 were determined to be fair and proportionate and accordingly recoverable, it will be interesting to see how things unfold in regards to the substantive claim.