Adjudication: Crystallisation Of Disputes And The Severability Of An Adjudicator's Decision

In the case of Working Environments Ltd v Greencoat Construction Ltd, [2012] EWHC 1039 (TCC) Mr Justice Akenhead looked at whether there was a crystallised dispute in circumstances where the Notice of Adjudication had been issued before the due date for payment. He also examined the extent to which the certain issues fell within the adjudicator's jurisdiction and, if they did not, whether it was possible to sever the adjudicator's decision to exclude those issues which fell outside of the crystallised dispute.

The Facts

The Defendant, Greencoat Construction Ltd ("Greencoat"), was a main contractor employed to carry out fitting out works at an office in Shaftesbury Avenue, London. Working Environments Ltd ("WE") were engaged as a subcontractor to carry out the mechanical services installation for the project. The adjudication clause incorporated the statutory scheme.

On 24 November 2011, WE submitted Application 10 to Greencoat as a result of which they claimed a total amount of £488,153.45 was due to them. On 2 December 2011 Greencoat issued its "Payment Certificate and Notice of Withholding Payment" in which it claimed that only £16,686.36 was due to WE. In a breakdown headed "Notification of items being withheld from this Valuation" a number of items were listed including "liquidated damages – tbc."

Payment was due under the Subcontract on 14 January 2012. On 8 December 2011 WE's claims' consultant wrote to Greencoat stating that there had been an undervaluation of WE's work and that a Notice of Adjudication would follow. The Notice of Adjudication was duly issued on 14 December 2011. Greencoat argued that the adjudicator had no jurisdiction because no dispute had crystallised as the date for payment had not yet accrued.

On 5 January 2012 Greencoat issued a withholding notice which listed a total of 12 items within it. This included liquidated damages of £120,000 as well as two other items which had not been raised previously. Greencoat expressly refused to extend the jurisdiction of the adjudicator to consider the withholding notice.

The adjudicator rejected Greencoat's jurisdiction arguments and found that "the amount due for payment on 14 January 2012 (excluding VAT) equals £277,378." This figure was later amended downwards (via the slip rule) to £250,860.

WE sought to enforce the decision. Greencoat maintained that either no dispute had crystallised or no crystallised dispute could enable the adjudicator to require payment and at best...