Crystal Clear: "No Dispute" Defences Unlikely To Succeed At Adjudication Enforcement

• Published date: 27 May 2022
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Contracts and Commercial Law, Construction & Planning
• Law Firm: Gatehouse Chambers
• Author: Mr Rob Hammond

While defendants in adjudication enforcement proceedings often assert jurisdictional defences as a matter of course, Eyre J's judgment in BraveJoin Co Ltd v Prosperity Moseley Street Ltd is a reminder that - in practical terms - they will rarely succeed, particularly where they rely on the absence of a crystallised dispute.

BraveJoin Co Ltd v Prosperity Moseley Street Ltd

These enforcement proceedings arose from an adjudication between the sub-contractor, Bravejoin Co Ltd, and the employer, Prosperity Moseley Street Ltd.

In November 2020, following the contractor's administration, Bravejoin sent six invoices totalling '78,000 to a Mr Hay, who acted for Prosperity and its group companies. Mr Hay responded stating that Bravejoin would be paid in December and attached a payment notice relating to some of the invoices. In January 2021, Mr Hay subsequently sent two pay less notices to Bravejoin. All invoices went unpaid. Among other things, Prosperity asserted that the contractual party from whom payment was sought was inadequately ascertained in the invoices.

Bravejoin referred the dispute to adjudication. In response, Prosperity took a jurisdictional defence, alleging that no dispute had crystallised. The adjudicator disagreed, holding that the submission and non-payment of invoices was sufficient to trigger crystallisation. He held that - via Mr Hay - Prosperity had treated five of the invoices as valid and was required to pay the sums claimed therein.

Prosperity's non-payment persisted and Bravejoin commenced adjudication enforcement proceedings. Prosperity maintained its position, opposing enforcement.

Eyre J's decision

In the High Court, Eyre J usefully recounted the following principles on crystallisation:

• The word "dispute" as used in section 108 of the Construction Act 1996 should be given its ordinary meaning and not a special or unusual legal meaning (Collins v Baltic Quay Management Ltd).
• To determine if a dispute has crystallised, it is necessary to determine whether there has been a claim by one party - meaning an assertion of rights - and whether that claim is not admitted. Whether the claim is disputed can be inferred from the facts: there needn't be an express rejection of the claim (Ringway Infrastructure v Vauxhall Motors).
• Inactivity by a party receiving a claim may still result in crystallisation of a dispute (CSK Electrical Contractors v Kingwood Electrical Services). Such inactivity will, in the right case, include not making payments (...