Case spotlight: Bell Building Ltd v TClarke Contracting Ltd

This case concerned adjudication enforcement proceedings.

The sub-contractor, Bell, sought to enforce an adjudicator’s decision pursuant to which the main contractor, TClarke, was required to pay a sum due under payment application number 18 in the absence of a valid pay less notice.

TClarke commenced Part 8 proceedings, seeking a declaration that it had issued a valid pay less notice.  The court ordered that the claim proceed as a Part 7 claim. After a three-month stay, Bell issued adjudication enforcement proceedings.  TClarke argued that the adjudicator’s decision should not be enforced due to lack of jurisdiction and/or a breach of natural justice.

TClarke’s position was that the adjudicator took it upon himself to value the work done under application number 18 and awarded a sum higher than that sought by Bell. TClarke’s view was that the adjudicator’s jurisdiction did not extend to performing either of those tasks.

Background facts

Bell issued their interim application number 18 on 20 April 2023 and TClarke issued a document entitled “Pay Less Notice 18” on 6 June 2023 which gave a notified sum. That notified sum was paid on 21 June 2023. A dispute then arose between the parties in respect of payment application number 18 and Bell’s position was that the pay less notice was invalid and referred the dispute to adjudication.

In the Notice of Adjudication, Bell stated that they did not give the adjudicator jurisdiction to decide a true value of the claim and reserved their right to bring such a claim in any subsequent adjudication.  They sought payment in the outstanding sum of approximately £1.4m as a debt.

The referral echoed the jurisdictional points of the notice and Bell added that it did not give the adjudicator jurisdiction to decide the value, true or otherwise, in respect of any other payment claim and reserved the right to bring such a claim in any subsequent adjudication.

Adjudicator’s decision

In his decision, the adjudicator acknowledged that this was a “smash and grab” adjudication and did not concern the true value of the works.

He concluded that the document issued by TClarke on 6 June 2023 was not a valid pay less notice and had no standing. He further decided that TClarke should pay Bell the sum sought. He also went on to say that TClarke challenged Bell’s calculation of the amount to be paid on the basis that it included TClarke’s payment regarding application number 19.

The adjudicator stated that as he could not take into account a payment made under Application 19, as that would be outside his jurisdiction, he decided that the sum to be awarded to Bell was approximately £2.1m as a debt which took into account the payment made by TClarke in relation to application number 18 only.

The adjudicator’s decision in relation to the awarded sum was as a result of emails between the parties during the course of the adjudication. Bell’s claimed sum of approximately £1.4m was calculated by deducting the sums paid by TClarke at the date of the referral from Bell’s gross valuation and application number 18, less retention. TClarke challenged Bell’s calculation on the basis that included payments made under application numbers 18 and 19. The adjudicator concluded that he had no jurisdiction to consider payments made under application number 19. This resulted in an assessment of the sum due under application number 18 being greater than the sum specified in Bell’s notice and referral.

TCC’s decision

The court decided that the adjudicator did not breach the rules of natural justice as his decision was based on the material provided by Bell in answer to a question from the adjudicator.  The judge stated that the adjudicator only corrected the arithmetic and did not carry out a valuation.

On the jurisdiction point, the judge concluded that it was TClarke’s invitation to ignore payments made under application number 19 which resulted in a different assessment of the sum due than claimed by Bell.  This was within the adjudicator’s jurisdiction.  Bell was therefore entitled to summary judgment.