Development Of The Law On The Severance Of Adjudicator's Decisions ' Downs Road Development LLP V Lexmanbhai Construction (UK) Ltd

• Published date: 03 November 2021
• Law Firm: Gatehouse Chambers
• Author: Michael Levenstein

Michael Levenstein and Tom Ames review the recent TCC decision in Downs Road Development LLP v Laxmanbhai Construction (UK) Limited [2021] EWHC 2441 (TCC).

Introduction

The Technology and Construction Court's recent decision in Downs Road Development LLP v Laxmanbhai Construction (UK) Limited [2021] EWHC 2441 (TCC) has contributed to the developing case law surrounding the severance of adjudicator's decisions. The case illustrates that severance will not be available in all the situations where previously it might have been expected.

The judgment of HHJ Eyre QC has provided judicial direction on the factors which may be taken into account when determining whether an aspect of the adjudicator's decision can be safely severed from parts which are unenforceable by reason of a breach of natural justice or a jurisdictional error. The crucial question, according to HHJ Eyre QC, is whether the adjudicator's decision is composed of several decisions, or a single decision with accompanying reasoning. In the latter circumstance, severance will not be possible.

The Facts

Downs Road Development (the Employer) engaged Laxmanbhai Construction (the Contractor) to carry out construction works under a JCT Design and Build Contract (2011 Edition). A dispute arose over the correct sum due to the Contractor in Payment Cycle 34. On 26th February 2021, the Contractor had sent Interim Payment Application 34 identifying that '1.89 million was due to them. Five days later, the Contractor sent a 'holding' Payment Notice valuing the interim application at '0.97; this was followed on 9th March by Payment Notice 34a, providing a net amount for payment of '657,218.50. This smaller sum was subsequently paid, but the issue of the correct sum due in Payment Cycle 34 was referred to adjudication (the Adjudication) by the Contractor.

When the Contractor gave notice of adjudication, they stated that the Adjudication concerned "the correct sum due to the Referring Party in Interim Payment Nr 34". At the Adjudication, the Employer issued a contra-charge of '149,692.30 in respect of a capping beam which they claimed had been positioned incorrectly.

Mr Entwistle (the Adjudicator) took a narrow view of his jurisdiction and decided that his task was constrained to the correct valuation of Interim Payment 34, determining that the capping beam contra-charge was outside his jurisdiction. In his decision, the Adjudicator set a value of '771,045.48 for the sum due to the Contractor; more than what the...