Too Late: TCC Upholds Part 8 Challenge Against Adjudication On Grounds Of Limitation

• Published date: 16 February 2023
• Subject Matter: Real Estate and Construction, Construction & Planning
• Law Firm: Shepherd and Wedderburn LLP
• Author: Mr Iain Drummond and Lindsay Robinson

LJR Interiors Ltd v Cooper Construction Ltd involved a successful Part 8 claim against an adjudication award, providing a helpful example to businesses of when it is appropriate to challenge an adjudicator's decision. This case is a useful contrast to Breakshore v Red Key Concepts, where the Part 8 challenge failed.

Facts

Cooper Construction contracted with LJR Interiors to perform dry lining, plastering and screed works at a development property in Oxfordshire. The parties did not adopt a standard form contract, and instead reached agreement through letter and purchase order on 26 August 2014. The agreement did not include an adjudication clause, so the Scheme for Construction Contracts applied by virtue of the Housing Grants, Construction and Regeneration Act 1996.

The works were completed on 19 October 2014. LJR submitted three payment applications. Cooper paid the sums due minus '1,900, which was a portion it disputed. The parties exchanged emails between 2015 and 2016, ending in an email from LJR on 20 December 2016 purporting to request payment. 6 years later, on 31 July 2022, LJR sent to Cooper Payment Application No. 4 for '3,257. Cooper neither paid nor responded, leading LJR to raise an adjudication on 9 September 2022.

Adjudication

LJR argued it was entitled to payment under the contract, since the final date for payment had passed for Application No. 4 on 28 August 2022. Cooper responded that Application No. 4 was time-barred as it had been submitted outside the 6-year limitation period, which it claimed ran from 31 October 2014 when LJR issued Application No. 3. Cooper contended that Application No. 4 was simply a restatement of No. 3. LJR pointed to its email in December 2016 as the starting point for limitation.

The adjudicator decided that Application No. 4 was a valid payment notice, with the limitation period running from 28 August 2022 when Cooper failed to make payment. LJR raised a Part 7 claim to enforce the adjudicator's decision, while Cooper lodged a Part 8 claim to have the decision declared void.

Court's decision

The judge began by recounting that adjudication decisions are designed to be enforced (bar very limited circumstances), as the primary principle is to "pay now and argue later". Hutton Construction Ltd v Wilson Properties (London) [2017] EWHC 517 (TCC) explained what a party resisting enforcement through a Part 8 claim must show to succeed. It needs to demonstrate that there is a clear-cut issue, not relating to a...