By a contract dated 20 November 2011, St Austell Printing Company Ltd (“St A”) engaged Dawnus Construction Holdings Ltd (“Dawnus”) to carry out and complete the design and construction of two warehouse/industrial units in St Austell, Cornwall. The contract sum was in excess of £5.5 million. 

Practical completion of the works was achieved on 6 February 2013.  On 26 April 2013 the contract administrator issued interim valuation 17 in the gross sum of just over £6 million. 

On 10 December 2013 Dawnus issued interim application for payment No.19, together with a mass of supporting documentation.  Although this was not a final account application, it was a comprehensive application for interim payment which took account of the fact that the works had been completed for some time.  The application was in the gross sum of almost £8 million, and the net sum claimed was £2.3 million.  This included a claim in respect of changes and variations of about £1.9 million, of which around £900,000 reflected the measured work element of those changes and variations. 

On 17 December 2013 Dawnus enclosed a sales invoice in the sum of £2.3 million, seeking payment by 4 January 2014.  It appears that this was intended to be a payee’s notice because Dawnus mistakenly believed that the contract administrator had failed to serve a payment notice in due time.  In fact they had not. 

On 19 December 2013, the contract administrator delivered to Dawnus payment notice No.18.  This said that the sum so far paid to Dawnus (just over £6 million, by way of the valuation and payment made in April) remained the correct valuation and that no further sum was due to Dawnus.  Thus the figure of “£0.00” was entered into the “amount due” column. 

On 26 August 2014, Dawnus commended adjudication proceedings. These proceedings were limited by Dawnus to the measured value of 115 specific changes and variations.

In Section 6 of the notice, at paragraph 6.1b), Dawnus expressly sought payment by St A of the sums claimed in respect of the 115 changes.  Thus this is not a case in which, by reference to the relief claimed in the notice of adjudication, Dawnus limited their claim to a declaration as to their entitlement.  They expressly sought an order for payment.

St A took both their jurisdictional points (no crystallisation and no power to order payment of part only of interim application 19) in the adjudication.  They said that no dispute about the changes had crystallised at the time of the notice in August.

The adjudicator concluded that St A’s jurisdictional challenge was “entirely without merit” and ordered St A to make payment to Dawnus, by 7 November 2014, of the sum of £417,919.66 together with his fees.  Dawnus then went on to seek to enforce this decision. 

Coulson J stated that he was no doubt that, however it is analysed, the dispute about what, if any, sums were due to Dawnus on the basis of interim application 19 had crystallised long before the notice of adjudication and was in no doubt that the first jurisdictional challenge must fail.

Coulson J then turned to the second objection, that the adjudicator did not have the power to order St A to make any payment, because the dispute that was referred to the adjudicator was strictly limited to just one part of interim application 19. Here he concluded that the second jurisdictional challenge maintained by St A must also fail for the reasons set out below. 

First, he referred to the decision in Fastrack Contractors Ltd v Morrison Construction Ltd [2000] BLR 168 which makes plain that a claimant is entitled to prune his original claim for the purposes of his reference to adjudication. 

Secondly, there can be no doubt that, in the words of Judge Lloyd in David McLean Housing Ltd v Swansea Housing Association Ltd [2002] BLR 125, St A were liable to make an interim payment to Dawnus under the contract.  On the adjudicator’s analysis, a substantial sum was due to Dawnus in respect of the measured work element of the 115 changes included in interim application 19.  That amount, at the very least, should have been paid by 4 January 2014.  The adjudicator’s decision was therefore a decision reflecting St A’s existing liability to pay and does not create a liability to pay when none existed before. 

Coulson J went on to state that if the adjudicator had been obliged to consider the entirety of the interim application, he would either have found that further sums were due to Dawnus or, at the very least, that their entitlement was not less than the sum which he found to be due. In other words, this is a sterile objection.

The mere fact that Dawnus had limited their own claim to the measured work value of the 115 changes, did not in any way limit or prevent St A from defending that claim, and raising their own cross-claim by way of set-off.

Accordingly, the absence of a cross-claim in the adjudication cannot be the result of the wording of the notice of adjudication or of the referral, because neither would or could have prevented St A from raising any legitimate cross-claim by way of defence to the limited claim being advanced in the adjudication.

For these reasons, therefore, the second ground of jurisdictional objection also failed. 

In consequence Dawnus were entitled to summary judgment, pursuant to CPR Part 24, in relation to the sums ordered by the adjudicator.