England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		08/12/2008

The Hon. Mr Justice Ramsey MR JUSTICE RAMSEY:

Introduction

1. The claimant ("PTB") seeks summary judgment for £314,242.18 plus interest against the defendant ("ROK") in respect of sums held due to PTB in an adjudicator's decision dated 1 October 2008. ROK oppose enforcement of the adjudicator's decision on a number of grounds.
2. PTB was engaged by ROK to carry out work to kitchens and bathrooms in council-owned properties in Harlow, Essex as part of the Harlow Decent Homes project. There is a dispute as to the contractual relationship between PTB and ROK and, in particular, whether there was a contract in writing within the provisions of s.107 of the Housing (Grants) Construction Regeneration Act 1996 ("The 1996 Act").

The adjudication

3. PTB contended that ROK failed to make payments or had made late payments in respect of applications for payment that PTB had submitted to ROK. On 11 August 2008 PTB served a notice of adjudication on ROK. Attached to that notice was a statement of dispute, together with a document which had the title: "Anticipated final account". PTB claimed a sum of £376,224 for works completed up to 11 August 2008.
4. In response, on 13 August 2008, ROK said this:

"Contrary to your letter and attachments, we would confirm the dispute which you are attempting to refer does not exist and your submission is flawed and unfounded. Furthermore, any attempt on your part to continue with this action will ultimately lead to wasted time and resources on your part, as well as our pursuing your company for our costs in dealing with this matter.

With respect, we would refer you to our previous submissions and content of our recent meetings whereby we have confirmed to you our view that your works are grossly over-valued and you have attempted to misrepresent the extent of actual works carried out and completed. This, as you have been made aware, has and is causing ROK some difficulties and embarrassment with our client, although we acknowledge that this is a matter for us to resolve directly with Harlow District Council.

We would also refer you to the email issued by your Mr Jerry Twum-Asare dated 26th June 2008 which we aver corroborates and acknowledges your over-valuation."

5. There followed correspondence in which ROK reaffirmed that there was no dispute. They also said that, if there was a dispute, they would not be prepared to accept the adjudicator proposed by PTB and suggested that PTB should apply to a nominating body for an appointment. On 20 August 2008, PTB served a second notice of adjudication on ROK. They attached a statement of dispute, together with an application document with the title "Final account", being an application for payment expressed as a "Final account for works completed on the above reference project in the sum of £411,465.94". PTB applied for an appointment to the Chartered Institute of Arbitrators. They appointed the Adjudicator, Mr Peter Barnes, who wrote to the parties on 22nd August 2008.
6. On 27 August 2008, PTB sent the Adjudicator a written statement of dispute. ROK also wrote to the Adjudicator on 27 August, attaching the notice of adjudication dated 11 August 2008 and subsequent correspondence up to 14 August 2008. They then said:

"As you will hopefully glean from such correspondence, there is no dispute crystallised and, as such, there can be no formal adjudication. Furthermore, ROK would confirm having received no referral notice not later than seven days from their receipt of the notice of adjudication (11 August 2008)."

7. They then invited the Adjudicator to resign. PTB wrote to the Adjudicator and ROK pointing out that the notice of adjudication was that dated 20 August 2008. On 28 August 2008, ROK confirmed that they had received that notice of adjudication. The Adjudicator then wrote to the parties on 28 August 2008 and dealt with two challenges to jurisdiction. He stated that the referral on 28 August 2008 was within time given that the notice of adjudication was dated 20 August and there was a bank holiday on 25 August 2008. In relation to ROK's contention that there was no crystallised dispute, he concluded that a dispute had existed in respect of the alleged non-payment of amounts due to the referring party prior to the notice of adjudication dated 20 August 2008. He therefore confirmed that he intended to proceed with the adjudication and he concluded by asking PTB to arrange for a full copy of the contract between the parties to be provided by 29 August 2008. Documents were then provided to him on that date.
8. On 4 September 2008 ROK served a response in which they took a number of points on jurisdiction. They stated at paragraph 1.2 that:

"In making this response and participating in this adjudication, ROK reserves its position as to the jurisdictional matters referred to in section 2 below and does not confer upon the adjudicator any power or authority that he does not have otherwise have."

9. In section 2 they referred to the following points on which they challenged jurisdiction: "(a) Legal entity; (b) No written subcontract; (c) No crystallised dispute; (d) Wrong principles of nomination; (e) Submission of new information and (f) Invalid notice of adjudication and referral."
10. ROK also attached several appendices and set out an ascertainment of PTB's application in the gross sum of £722,957.18, without prejudice to the challenge to jurisdiction. ROK also said that the Adjudicator's powers were limited to addressing the remedies sought and that no other amount could be awarded other than that set out in the statement of dispute. PTB served a counter-response and wrote correspondence dealing with the points raised by ROK.
11. In a letter dated 18 September 2008, the Adjudicator dealt with and rejected the jurisdiction challenges (a) to (f) and the contention his powers were limited to the remedies sought. The adjudication then continued and the Adjudicator made his decision on 1 October 2008 in which he decided that ROK should pay PTB the sums now claimed in these proceedings.
12. At some date afterwards ROK paid the Adjudicator the sum of £11,638.38 in respect of his fees and expenses as set out in the decision. There was subsequently concern by PTB that, as Mr Hough says in his statement on behalf of PTB:

"The challenge on the basis of 'No crystallised dispute' would be the source of considerable argument and expense in any enforcement proceedings."

13. PTB therefore issued a new notice of adjudication dated 15 October 2008 and applied for and obtained the appointment of a new adjudicator, Mr Peter Brooker, on 20 October 2008. When ROK received a letter on 21 October 2008 from Mr Brooker, they wrote to him in the following terms:

"The exact same dispute has been the subject of a previous adjudication commenced by PTB. It was decided by Mr Peter Barnes. We enclose a copy of the previous adjudicator's decision dated 1 October 2008. Paragraph 17 of that decision confirms that the dispute was in relation to payment of the final account dated 20 August 2008. The adjudicator decided, amongst other matters, that we should pay PTB the sum of £314,242.18. Given that a dispute in relation to payment of the final account dated 20 of August 2008 has already been referred to adjudication, it cannot be the subject of a second adjudication. If PTB do not agree with the existing adjudicator's decision, their only remedy is to refer the dispute to litigation.

In the circumstances, please confirm that you will resign your appointment as adjudicator.

For the avoidance of doubt, we have raised a number of jurisdictional arguments in the previous adjudication. We consider that our jurisdictional arguments have merit and so we have not paid PTB the sums awarded. In the unlikely event that you decide to continue to act as adjudicator, we reserve the right to raise these additional arguments in this reference."

14. ROK wrote further on 23 October 2008 and said:

"As referred to in our previous letter, we have a number of jurisdictional challenges. However, the primary point is that the referring party has asked you to value its final account. This is exactly the same dispute that was decided by the previous adjudicator. We admit that we have not paid the sums awarded by the previous adjudicator because we do not believe that his decision is enforceable. For the avoidance of doubt, to the extent that PTB are asking you to either enforce or challenge the first decision, you have no jurisdiction to do so.

As regards the matters set out at paragraph 2 of the notice of adjudication, PTB may not refer multiple disputes in relation to several interim applications for payment to adjudication. In any event, given that the final account has been the subject of a previous adjudication, the position at the interim stage is redundant. We fail to see the relevance of the case referred to by PTB. The first adjudicator issued a decision in PTB's favour. Once again, we respectfully submit that you do not have jurisdiction given that the dispute has already been the subject of a previous adjudication."

15. On receipt of those letters and a letter from PTB, Mr Brooker said this:

"In the matter referred to me, Mr Barnes has already taken that second step and decided what sum was in fact due. He has done this because the wording of the dispute referred to him had, in his opinion, sufficient latitude in its wording to give him the jurisdiction so to do. Thus, it is my opinion that the dispute referred to me and the remedy sought is already the subject of a previous adjudicator's decision. Apart from this point, the only difference between the previous referral and the dispute referred to me are that the nature of the dispute and remedies sought have both been expanded and the responding party, which was previously cited as ROK Maintenance, is now cited as ROK Building Limited. In my opinion, the expanded wording merely adds detail in terms of dates, references and description, but does not change the issues in dispute from those already adjudicated upon. As to the name of the responding party, I take note of this point, which was raised as a jurisdictional challenge in the first adjudication. However, I do not consider that differentiating ROK Maintenance from ROK Building Limited is a significant enough step to consider the subject of this referral to be a fresh dispute.

In the light of the above points and careful consideration, I respectfully resign from the nomination to act in this matter."

These proceedings

16. By a claim form dated 29 October 2008, PTB sought to enforce the Adjudicator's decision dated 1st October 2008. Directions were made on 30 October 2008 and subsequently varied at the request of the parties, leading to the hearing on 4 December 2008. Exchange of evidence and submissions indicated that there were a number of issues which had to be resolved on the application for summary judgment. Those were helpfully defined at the hearing as follows:

(1) Is ROK entitled to contend that the decision is not binding in the light of:

(a) its objection to the commencement of the adjudication before Mr Brooker;

(b) its payment of the adjudicator's fees?

(2) Is there a contract in writing within the meaning of s.107 of the 1996 Act?

(3) Is ROK entitled to resist enforcement on the basis that the claim included work outside the scope of the contract in writing?

(4) Did the Adjudicator lack jurisdiction on the basis that the dispute referred to him had not crystallised? Alternatively, did the manner in which the dispute was referred amount to such a serious breach of the rules of natural justice that the decision should not be enforced?

(5) Was there non-compliance with paragraph 7(2) of the Scheme so that there was not a valid adjudication? Alternatively, did any non-compliance amount to such a serious breach of the rules of natural justice that the decision should not be enforced?

(6) Did the Adjudicator answer the wrong question so as to deprive the decision of any effect?

17. I shall deal with each of those matters in turn.

Can ROK contend that the decision is not binding?

18. Mr Piers Stansfield, who appears on behalf of PTB, submits that by taking the benefit of the Adjudicator's decision and using it to persuade the second adjudicator to resign, ROK has elected to take the benefit of the decision and cannot now assert that it is not valid and binding. He also relies on the fact that ROK has now paid the adjudicator's fees and says that, by analogy with the decision in Shimizu Europe v. Automajor [2002] BLR 113 at paragraph 29, ROK can no longer seek to contend that the decision is not binding.
19. Mr Jonathan Lee, who appears on behalf of ROK, submits that ROK has made no election which would preclude it from being able to challenge the decision. He relies on the reservation of rights in the letter sent to Mr Brooker on 22 October 2008, as well as the general reservation made in paragraph 1.2 of the Response. He also submits that the payment of the Adjudicator's fees was made by mistake and that payment of those fees cannot be said to be taking a benefit from the decision.
20. I now consider those submissions. The law on election which, Mr Stansfield submits, prevents a party from "approbating and reprobating" or relying on and challenging the decision of an adjudicator is of some antiquity. In Codrington v. Codrington [1875] LR 7 HL 854 at 866, Lord Chelmsford expressed the doctrine in these terms:

"He who accepts a benefit under an instrument must adopt the whole of it, conforming to all its provisions and renouncing every right inconsistent with it."

21. In Banque des Marchands v. Kindersley [1951] 1 Ch 112, a party sought to strike out an action on the basis that a bank was nonexistent and yet at the same time it was seeking to prove in the liquidation of the bank. The Court of Appeal, in finding that there had been no election, referred to the phrase "approbating and reprobating" in Scottish law, or the English phrase, "Blowing hot and cold" and said this at 119 per Lord Evershed MR :

"From the authorities cited to us, it seems to me to be clear that these phrases must be taken to express, first, that the party in question is to be treated as having made an election from which he cannot resile and, secondly, that he will not be regarded, at least in a case such as the present, as having so elected unless he has taken a benefit under or arising out of the course of conduct which he has first pursued and with which his present action is inconsistent. These requirements appear to me to be inherent. For example, in Smith v. Baker LR 8 CP 350 and Ex parte Roberston LR 20 Eq 733. See also the speech of Lord Atkin in Evans v. Bartlam [1937] AC 473 at 479:

"I find nothing in the facts analogous to cases where a party, having obtained and enjoyed material benefit from a judgment, has been held precluded from attacking it while he is still in enjoyment of the benefit. I cannot bring myself to think that a judgment debtor who asks for and receives a stay of execution approbates the judgment so as to preclude him thereafter from seeking to set it aside, whether by appeal or otherwise. Nor do I find it possible to apply the doctrine of election."

and the speech of Lord Russell of Kilowen at 483:

"The doctrine of approbation and reprobation requires for its foundation inconsistency of conduct as, where a man having accepted a benefit given him by a judgment, cannot allege the invalidity of the judgment which conferred the benefit."'"

22. In Lissenden v. CAV Bosch Limited [1940] AC 412 the House of Lords held that the doctrine did not prevent a party from receiving benefits under an award and seeking to appeal the award to obtain greater benefits. Lord Atkin said at 429:

"In this country, I do not think it expresses any formal legal concept. I regard it as a descriptive phrase equivalent to, 'Blowing hot and cold'. I find great difficulty in placing such phrases in any legal category, though they may be applied correctly in defining what is meant by election, whether at common law or in equity. In cases where the doctrine does apply, the person concerned has the choice of two rights, either of which he is at liberty to adopt but not both. Where the doctrine does apply, if the person to whom the choice belongs irrecoverably and with knowledge adopts the one, he cannot afterwards assert the other. Election between the liability of principal and agent is perhaps the most usual instance in common law."

23. In the context of adjudication claims, the principle has, in particular, been relied on in two decisions. In Macob v. Morrison [1999] BLR 93 Dyson J, as he then was, had to consider, in the first case of enforcement of an adjudicator's decision, whether a party could both assert that the adjudicator's decision was invalid and also seek to assert that proceedings in relation to the decision should be stayed to arbitration under clause 27 of the contract. Dyson J said this at 99:

"In my view, if a defendant wished to challenge the validity of the decision, it had an election. One course open to it was, as it did, to treat it as a decision within the meaning of clause 27 and refer the dispute to arbitration. The other was to contend that it was not a decision at all within the meaning of clause 27 and to seek to defend the enforcement proceedings on the basis that the purported decision was not binding or enforceable because it was a nullity. For the reasons stated earlier in this judgment, this second course would have availed the defendant, but what the defendant could not do was to assert that the decision was a decision for the purposes of being the subject of a reference to arbitration but was not a decision for the purposes of being binding and enforceable pending any revision by the arbitrator. In so holding, I am doing no more than applying the doctrine of approbation and reprobation or election. A person cannot blow hot and cold - see Lissenden v. CAV Bosch Limited [1940] AC 412, and Halsbury's Laws, Fourth Edition, Volume 16, paragraphs 957 and 958. Once the defendant elected to treat the decision as one capable of being referred to arbitration, he was bound also to treat it as a decision which was binding and enforceable unless revised by the arbitrator."

24. In Shimizu Europe v. Automajor His Honour Judge Seymour Q.C. dealt with a case in which a party sought to challenge the jurisdiction of an adjudicator but had also sought to correct the decision under the implied slip rule. Judge Seymour said this, obiter, at paragraphs 29 to 30:

"In my judgment, by inviting Mr Haller to correct the award under the slip rule, Berwins, on behalf of Automajor, accepted that the award was valid. It is true that, in its letter to Mr Haller dated the 6th of November 2001, Berwins asserted that the award contained an error which went to Mr Haller's jurisdiction, but, if that were right, it would follow that the award, or the relevant part of it, was a nullity. There would be nothing to correct. I accept the submission of Mr Constable that the invitation to Mr Haller to correct the award under the slip rule is only consistent with recognising it as valid. I also accept the submission of Mr Constable that, by paying part of the sum the subject of the award, Automajor elected to treat the award as valid."

25. He also said at paragraph 29:

"In my judgment, it cannot be right that it is open to a party to an adjudication simultaneously to approbate and reprobate a decision of the adjudicator. Assuming that good grounds exist on which a decision may be subject to objection, either the whole of the relevant decision must be accepted or the whole of it must be contested."

26. In my judgment the underlying decisions on election or approbation and reprobation, as applied in the context of adjudication, show that a party cannot both assert that an adjudicator's decision is valid and at the same time seek to challenge the validity of the decision. The party must elect to take one course or the other. By taking a benefit under an adjudicator's decision, the party will generally be taken to have elected a particular course and will be precluded from challenging the adjudicator's decision. In Macob the benefit was the claim to have the proceedings stayed to arbitration in relation to the decision. In Shimizu the benefit was the right to have the decision corrected under the slip rule.
27. In the present case, it is to be noted that, somewhat unusually, PTB had obtained the adjudication decision from the Adjudicator but then because of concerns had decided to seek a further decision from Mr Brooker. Mr Lee says that this itself was inconsistent with seeking enforcement of the decision made by Mr Barnes. That, it seems to me, is self-evidently correct. However, I do not consider that it gives rise to an election which can effect enforceability of the current decision, particularly on the facts of this case. Questions of enforceability might have arisen if the second adjudication had proceeded further, especially if there had been a second decision.
28. In this case, I consider that the commencement of the second adjudication caused a difficulty for ROK in relation to any challenges that it wished to make to the enforceability of the first decision made by the Adjudicator. In my judgment, ROK had to elect whether to contend that the first decision was unenforceable so that it would not preclude PTB from commencing that second adjudication, or whether to contend that it was enforceable so that it would preclude a second adjudication. If it chose the first alternative, then it could repeat certain challenges to the jurisdiction of the adjudicator in the second adjudication, but it could not assert that the first adjudication decision prevented the adjudicator from continuing with the second adjudication. ROK could only do so if it were to assert that the first adjudication decision was a valid decision. ROK chose the second alternative, it chose to assert that there was a valid adjudication decision arising from the first adjudication which precluded the second adjudicator from proceeding. By doing so, I consider that it elected to treat the first decision as a valid decision. In the letters of 22 and 23 October 2008, which I have cited above, ROK informed the second adjudicator that they had raised jurisdictional challenges in respect of the first decision and had not paid PTB. However, in making the challenge to the second decision, I consider that they elected to rely on the benefit of that first decision and in doing so elected not to challenge that decision. The statement in their letter did not and, in my view, could not affect that election. The second adjudicator decided not to proceed with the second adjudication and resigned. That was a clear benefit which ROK obtained by relying on the first decision. In those circumstances, I do not consider that ROK can now seek to challenge the validity of the Adjudicator's decision in these enforcement proceedings.
29. PTB also relied on the fact that ROK had paid the Adjudicator's fees and had thereby elected to treat the Adjudicator's decision as valid. I do not consider that, in the absence of evidence to show that the payment was a mistake, the court can come to that conclusion as a matter of inference or otherwise, as Mr Lee sought to submit. Rather, the natural inference from the payment of the adjudicator's fees is that ROK intended to make payment in respect of a valid decision requiring such payment. Did that payment amount to an election? Mr Lee submits that it is difficult to characterise ROK's payment as amounting to ROK taking a benefit. There is strength in that point but, in my judgment, the taking of a benefit, whilst sufficient for there to be an election, is not necessary. What has to be determined is whether there has been an election. Objectively, a party who decides to pay a sum awarded against it in an adjudicator's decision does so in reliance on that decision being valid. I consider that, in the absence of any circumstances indicating to the contrary, by making that payment ROK elected to treat the adjudicator's decision on fees and expenses as being a valid decision, at least to that extent.
30. In my judgment, the election made by ROK by its reliance on the first decision means that ROK cannot now challenge that decision. However, having heard argument, I now turn to consider the merits of the underlying challenges.

Contract in writing

31. Section 107 of the 1996 Act requires all the terms of the construction contract to be in writing or evidenced in writing: see RJT Consulting Engineers v. DM Engineering [2002] BLR 217. The requirement that all the terms of the construction contract have to be in writing has been criticised. The requirement, transferred word for word directly from s.5 of the Arbitration Act 1996, which requires the arbitration agreement and certain other agreements to be in writing, is evidently necessary where the effect of the arbitration agreement is to deprive the court of jurisdiction and other agreements have the effect of varying the non-mandatory provisions of the Arbitration Act 1996. While it is possible to explain the requirement that all the terms of a construction contract have to be in writing in terms of the need to have certainty, it has proved an impracticable requirement which has given rise to a number of challenges to enforcement of adjudicator's decisions. It is now the subject of a draft Bill which will seek to repeal that provision. Until that happens, the law is that the provisions of s.107 fall to be applied.
32. Were all the terms of the contract in writing or evidenced in writing in the current case? Mr Stansfield submits that all the terms were evidenced in writing and are included in a document with the title, "Subcontract pre-contract interview notes" signed by the parties in February 2007. I will refer to those as "the meeting notes". In the adjudication, ROK sought to challenge jurisdiction on the basis that the meeting notes stated at the beginning the following:

"The notes on their own do not constitute an offer [or] acceptance unless it is issued as part of a formal subcontract and were not a construction contract."

33. The adjudicator held that this did not preclude there being a contract which was evidenced by these meeting notes. The matter has, however, developed further before me. Mr Lee accepts that all the terms apart from the terms as to work scope were evidenced in writing by the meeting notes. He says that terms as to what work had to be carried out and where had to be agreed and that the notes do not contain the necessary terms. It is evident that the work scope is not fully defined within the meeting notes. Those notes refer to the project name being Harlow Decent Homes, Brenthall Towers and to the works being kitchen and bathroom fitting, with associated builders' works. Under paragraph 8.0, Programme, it is stated that the date for commencement of the subcontract works on site will be between certain dates. It refers to work at Potter Street, as apparently being completed, and, "Old Harlow, phase 2" as commencing between 31st August 2006 and ongoing. These are not self-evidently limited to works at Brenthall Towers. It refers to further information to be submitted to the subcontractor within a reasonable time prior to commencement of works, and to the period required for notice to commence works in any section on site as being five days. Under a title of, "Brenthall Towers" there is a general description of kitchen and bathroom works and a statement: "Kitchen, sum of £2,286.80 plus VAT and bathroom sum of £1,935 plus VAT."
34. Under the title of Any other matters discussed, it states: "All instructions for additional works as per submitted SORs [schedule of rates]."
35. It is evident that a full description of all works which PTB were to carry out is not contained in the notes of the meeting. However, the meeting notes envisaged that PTB would be provided with additional information prior to commencement of works and that instructions would be given for additional works. The terms of the agreement do not, in my view, limit the timing or scope of those instructions or the place where the work was to be carried out. Where a contract contains express terms which provide that a party will provide the other party with information about the works and will give instructions for additional works, then, in my judgment, there is no need for the scope of the works to be fully set out in or evidenced in writing in the underlying contract. The relevant contract term is in writing or evidenced in writing and the fact that it envisages performance taking place by further information or instructions, which may be oral or in writing, does not effect the fact that the relevant contract term itself was in writing or evidenced in writing.
36. Mr Lee referred me to the decision of his Honour Judge Coulson, Q.C, as he then was, in Hart v. Fidler [2007] BLR 30, in which he dealt with a case where there had been a letter of intent. One of the grounds on which it was said that there was no construction contract in writing was because the work scope had not been defined. At paragraph 61 of his judgment, Judge Coulson said this:

"However, the biggest difficulty comes with the consideration of the contract work scope. The work scope, according to the letter, is work which will or might be the subject of orders in the future, whether written or oral. That might be sufficient for a binding contract, although I do not think it is, and, as I have indicated, enforcement of it would be next to impossible. More importantly, such a definition of work scope is a recipe for confusion and dispute of the very sort which s.107(2)(c) is designed to avoid. This point can be emphasized by reference to Hart's own pleading in this case. In paragraph 3 of the particulars of claim Hart defined the contractual work scope as including:

'The retention and preservation of the front and side facades of the property, the removal of the main part of the building and the construction of the basement and the reconstruction of the building above the new constructed basement area.'

This work scope is plainly not discernible from the letter of intent. It is based on subsequent orders, instructions and the like, which may or may not have been reduced to writing. If the contract document does not even begin to define the contract work scope, it seems to me impossible to say that all the terms, or even all the material terms, are set out in writing."

37. Evidently, on the terms of that letter of intent Judge Coulson held that the terms of the work scope were not sufficiently contained in or evidenced in writing, on the facts of that case. In the present case, there was some work scope defined within the meeting notes, but that work scope was to be the subject of further information and instructions, both to commence and in terms of instructions given under the terms of the meeting notes. All these terms were evidenced in writing. I consider that, as a result, such a case as this does come within s.107 and is a valid contract in writing.
38. In the present case, were there terms which were agreed but which were not evidenced in writing? The way in which matters proceeded is described in Mr Dauncey's witness statement submitted on behalf of ROK. He says this at paragraphs 8 and following:

"ROK deny that [the Meeting Notes are] sufficient to fulfil the requirements of the HGCRA. It is clearly not a document that was intended by itself to form the subcontract. The notes were intended to be incorporated into a formal subcontract in due course in the event that a subcontract was awarded to PTB. Although it was anticipated that further terms and conditions would be discussed and that the interview notes would be incorporated into that subcontract, this did not happen. Instead, when ROK had packages of Decent Homes work in Brenthall Towers that it wanted to subcontract to PTB, separate instructions were issued to PTB and the scope of work to any particular property was defined by a combination of documents and oral site instructions.

Although the interview of the 15 February 2007 concerned kitchen and bathroom works at Brenthall Towers as part of the Decent Homes Project, ROK was awarded such work to a wider range of properties and, with later agreement of PTB, ROK gave further packages of work to PTB. Over the following months PTB's work was extended over many different properties. ROK accept that, while there is no written contract in respect of these works, it was agreed orally that these were to be valued and paid on the same basis as the kitchen and bathroom works in Brenthall Towers (those rates being revised by agreement between PTB and ROK from 1 January 2008). …

There is not, in my view, a sub-contract of which it can be said that all the terms are in or evidenced in writing, whether in the notes of the interview that took place on 15 February 2008 or otherwise.

This is emphasized further by the reference to the "Final Account" that PTB provided, for the first time, with the Notice of Adjudication on 20 August 2008. Within that account is a whole collection of works, some from Brenthall Towers Decent Homes (which was the subject of the meeting on 15 February 2007) and many from further kitchen and bathrooms work as part of the broader Harlow Decent Homes project that ROK was carrying out for Harlow District Council. Also within PTB's account are claims for payment in respect of work which is wholly unrelated and which cannot be related back to the meeting on 15 February 2007 in any shape or form, nor to any instruction that was issued by ROK in any extension of that work from Brenthall Towers to other Harlow Decent Homes kitchen and bathroom works."

39. He then refers to work on void properties and to work for Kier and Harlow District Council in respect of separate work at Harlow, for work to the Decent Homes standard. He also refers to work at Highgate and to work at Barley Croft. In respect of each of those, he indicates that there was a separate subcontract which arose from instructions being given to PTB.
40. Mr Stansfield relied on further documents as evidencing the construction contract, including these works. First, there was the document referred to as PTB rates, application as of January 2008, which contained a breakdown of "All-in basket scope of works" showing that the rates were to be applied for all work from that date. Secondly, he refers to letters dated 5 and 18 March 2008 by which ROK requested that PTB should include applications for all properties in its applications for the Harlow Decent Homes project. Thirdly, he relies on an exchange of emails in June 2008, which are referred to further below. This led to the process which culminated in the production of the final account document which was attached to the notice of adjudication dated 20 August 2008.
41. The provisions of s.107(4) of the 1996 refer to an agreement being evidenced in writing "if an agreement made otherwise than in writing is recorded by one of the parties." There is no need for the agreement to be recorded in one document, nor is there a requirement for when the record is to be made. In this case, it is common ground that the meeting notes contain all the provisions except those relating to work scope. I consider that the work scope is dealt with by the instruction of work under the terms which are sufficiently recorded in the signed meeting notes. In any event, the documents relied on by Mr Stansfield record the revised all-in basket rates which formed the basis of the phase 2 claims. Further, the discussions between the parties and the documents produced by PTB sufficiently record the scope of the works to the extent that this might be necessary.
42. As a result, I consider that all the terms of the construction contract are sufficiently recorded in writing to give rise to a contract evidenced in writing within s.107 of the Act and that ROK's defence to enforcement has no real prospect of success on that ground.

Work outside the contract

43. Mr Lee submits that, on the basis that there is a contract in writing, the Scheme would apply and paragraphs 8(1) and 8(2) of Part I provides as follows:

"8(1) The adjudicator may, with the consent of all the parties to those disputes, adjudicate at the same time on more than one dispute under the same contract.

8(2) The adjudicator may, with the consent of all the parties to those disputes, adjudicate at the same time on related disputes under different contracts, whether or not one or more of those parties is a party to those disputes."

44. As a result, Mr Lee submits that the adjudicator can only deal with a dispute under the same contract and not related disputes under different contracts. He refers in particular to evidence both in Mr Dauncey's witness statement, at paragraphs 8 to 11, and in Mr Ghataura's second witness statement at paragraphs 9 to 10. I accept that under the Scheme which applies to the construction contract in this case, PTB can only refer a dispute under that construction contract to adjudication.
45. However, the evidence of Mr Dauncey and Mr Ghataura does not, in my judgment, establish that the works in relation to the various properties were not in fact carried out as part of the construction contract evidenced in writing by the Meeting Notes and the other documents. First, it is evident that instructions were given by ROK to PTB to carry out works in relation to a number of main contracts by which ROK was asked to perform the work. Secondly, the arrangements made were that the work was to be administered under the terms of the construction contract evidenced by the Meeting Notes. No further independent subcontracts were formed at that stage, but ROK continued to instruct work which both parties treated as and dealt with under the one construction contract. This is also consistent with the late evidence from Mr White, who was formerly employed by ROK, but produced a witness statement on behalf of PTB.
46. In those circumstances, the dispute as to how much PTB had to be paid for the work carried out under the construction contract evidenced by the Meeting Notes and the other documents was, I consider, one dispute under one subcontract. In my judgment, there was, therefore, no ground for asserting that the adjudication fell foul of the provisions of paragraphs 8(1) or 8(2) of Part I of the Scheme in the manner set out in Bothma v. Mayhaven 114 ConLR at page 131 or Grove Deck v. Capital Demolition [2000] BLR 181.

Crystallised dispute

47. Mr Lee submits that the matters which PTB sought to refer to adjudication were not the subject of a crystallised dispute even on the basis of the flexible approach which has now been adopted by the courts on that question. Mr Stansfield submits that the dispute referred to adjudication by the notice of adjudication dated 20 August 2008 had been referred to in the first notice of adjudication on 11 August 2008 and disputed. As set out in Collins Construction Limited v. Baltic Quay Management (1994) Limited [2005] BLR 63 at 74, and AMEC Civil Engineering Limited v. The Secretary of State for Transport, both by Jackson J, as he then was, at first instance, at [2004] EWHC 2339, and on appeal at [2005] BLR 227 at 234. The circumstances from which a dispute may emerge are Protean. A process of negotiation and discussion may be consistent with the existence of a dispute and the court is likely to be willing readily to infer that a dispute exists so that the parties are not impeded from starting timely adjudication proceedings.
48. In this case, when PTB served its notice of adjudication on 11 August 2008, ROK wrote to say that a dispute did not exist but, on the other hand, said that they referred to previous submissions and the content of recent meetings when ROK had confirmed their view that PTB's works were grossly over-valued. PTB did not proceed with that notice of adjudication but did proceed with its further notice of adjudication dated 20 August 2008, which attached an amended document with the title, "Final account". That differed from the document served on 11 August 2008. In particular, whilst the figures under Phase 1 and Phase 1 variations remained the same, the entries under Phase 2 works and Phase 2 variations/CVIs and Dayworks changed by a few thousand pounds. In addition, retention was allowed at 5% in the earlier document and 2.5% in the document of 20 August 2008. The reason for the change in figures between the document of 11 August 2008 and that of 20 August 2008 is not entirely clear on the documents. The main change, as confirmed by Mr Ghataura, is that in general terms more detail was provided, particularly in relation to the Phase 2 variations/CVIs which were estimated in the earlier document.
49. I consider that the question of whether there was a crystallised dispute on 20 August 2008 has to be seen in the context of the process which led up to the notice of adjudication in August 2008. The history of matters is set out by Mr Ghataura, who refers to the application of 18 June 2008. He says that at about that time there were discussions between PTB and ROK about how they were to move forward in valuing PTB's works. He says that at a meeting between the parties on 12 June 2008 it had been agreed that the parties should first try to agree the value of the Decent Homes work at each property and then have discussions in relation to the value of variations. The exchange of emails between 12 and 27 June 2008 shows the process by which the valuation of those works was discussed. It is evident that the matters had proceeded on the basis of those discussions up until early August 2008. By that date, as ROK stated in their letter of 13 August 2008, they considered that PTB's works were over-valued.
50. In light of this background, I consider that PTB's notice of adjudication of 11 August 2008 and ROK's letter in response crystallised a dispute in respect of the valuation of the works in relation to Phase 1, Phase 2 and Dayworks to the extent that one had not previously crystallised. The dispute was as to the proper valuation of sums payable to PTB in respect of the works they had carried out. The fact that the second notice of adjudication included some further details of the sums claimed by PTB did not, I consider, mean that there was a new dispute which had not crystallised. In my judgment, this was a continuation of the dispute about the valuation of PTB's works which had formed the basis of discussion between the parties from June 2008. ROK refers, in particular, to there being no dispute as to the final account. There is no process under the meeting notes for there to be any different way of dealing with a final account compared to the usual procedure for application by PTB and payment by ROK. The final account in this case is, therefore, in my judgment, merely an application for payment of a type such as the others and it does not represent a different dispute to the dispute concerned with the proper valuation of PTB's work in the earlier applications. Therefore, on the basis of the exchanges between the parties from June 2008 up to 20 August 2008, I consider that there was a sufficiently crystallised dispute as to the proper valuation of PTB's work for the matter to proceed to adjudication. By the time of the exchange following the first notice of adjudication, at the latest, that dispute had crystallised.
51. Nor do I consider that the additional material provided by PTB with the first or second notices of adjudication rendered the process so unfair that the decision should not be enforced. Mr Ghataura, at paragraphs 25 to 31 of his first witness statement, deals with the further information provided on PTB's variation claims. He says that it was impossible to provide a line by line response to the variations before the response had to be served in the adjudication. He says that the best that ROK was able to do was to suggest that a percentage should be deducted. The adjudicator adopted that approach and used the method of a percentage reduction derived from his findings of the Phase 1 works applied for by PTB on its property build up sheets. Whilst I accept that ROK had to respond to new material, I consider that the process, including the response by ROK and the meeting which the adjudicator held on 24 September 2008, gave ROK a fair opportunity to present its case in the context of the adjudication. Further, the adjudicator adopted that approach put forward by ROK. There was, in my judgment, nothing obviously unfair in this process which could render the adjudicator's decision unenforceable - see Carillion v. Devonport [2006] BLR 15 at paragraph 85.

Paragraph 7(2) of Part I of the Scheme

52. As I have said, Part I of the Scheme applies to the contract in this case because it does not contain an adjudication provision. The Scheme requires, at paragraph 7(2) of Part I, that:

"A referral notice shall be accompanied by copies of or relevant extracts from the construction contract and such other documents as the referring party intends to rely upon."

53. Mr Lee submits that the failure by PTB to provide copies of the relevant construction contract with the referral notice means that PTB was in breach of the procedure under the scheme. He refers me to the decision of His Honour Judge Coulson, Q.C., as he then was, in Hart v. Fidler [2007] BLR 30, where he held that a failure of a party to serve its referral notice within seven days of the notice of adjudication, as required by paragraph 7(1) of part I of the Scheme, deprived the adjudicator of jurisdiction. Mr Lee submits that this must also apply to a breach of paragraph 7(2). Mr Stansfield submits that a failure to provide the adjudicator with the relevant documents until, it seems, 29 August 2008, when the referral notice was served on 28 August 2008, should not be held to deprive the adjudicator of jurisdiction. He observes that often there may be a dispute as to what documents form the agreement and in such cases it could be argued that, if not all the documents had been submitted with the referral notice, the adjudicator would lack jurisdiction. If that were to be so, he submits, then it would give rise to an unreasonable result which could not have been intended by the terms of the scheme.
54. In approaching this issue, it is to be recalled that, where the scheme applies, it does so as an implied term of the construction contract - see s.114(4) of the 1996 Act. The consequence of a party's failure to comply with the terms of a contract will generally be a breach of contract, which may have a number of consequences depending on the nature of the term and the breach. Under the 1996 Act, there are a number of terms which are fundamental to the process of adjudication and which are set out in s.108 of the 1996 Act. In my judgment, the central purpose of the scheme is to incorporate those fundamental provisions which, when absent, lead to the scheme being imposed as an implied term. The provision in paragraph 7(1) of Part 1 of the Scheme, which was considered in Hart v. Fidler, is derived from s.108(2)(b) of the Act. That, it seems to me, makes paragraph 7(1) of the scheme one of the fundamental provisions in the process of adjudication. On that basis, the decision that a late referral under paragraph 7(1) of the scheme took the process outside the scheme so as to make a decision unenforceable can be distinguished from a breach of paragraph 7(2) which refers to an associated procedural requirement.
55. I consider that it is undesirable that every breach of the terms of the scheme, no matter how trivial, should be seized upon to impeach the process of adjudication. To do so would increase the tendency of parties to take a fine tooth-comb to every aspect of the adjudication in the hope of finding some breach of the Scheme on which to impeach an otherwise valid adjudication decision. I do not consider that that was either intended or the natural effect of a failure to comply with the Scheme. There may, of course, be cases where the documents included with the referral notice are so deficient that it effects the validity of the adjudication process. However, I do not consider that a failure to include the relevant construction contract until a day later can do so or does so on the facts of this case. Nor do I consider that a failure to include the construction contract can be said to amount to such a serious breach of the rules of natural justice that the decision should not be enforced. There is nothing obviously unfair in the documents relied on in relation to the construction contract being received by the adjudicator later than the referral notice: see Carillion v. Devonport [2006] BLR 15 at paragraph 85.

The wrong question

56. I have already alluded to this aspect. Mr Lee submits that the adjudicator was asked to make a decision concerning the sums due to PTB in respect of the final account. He says that paragraph 2.12 of the Meeting Notes makes it clear that the subcontract final account is to follow the main contract final account. As a result, Mr Lee submits that the adjudicator, by answering the question, "What sum was due to PTB?" as a matter of interim accounting, failed to answer the question he was asked but answered a different question. It is therefore submitted that the adjudicator did not have jurisdiction to make the decision he purported to make. Mr Lee refers me to the decision in Nikko Hotels v. MEPC [1991] 2 EGLR 103, referred to in Bouygues v. Dahl-Jensen [2000] BLR 522.
57. Mr Stansfield submits that on the basis of the notice of adjudication the question which was referred to the adjudicator was whether there was non-payment of amounts due to PTB from ROK and, if so, what was the size of those non-payments? That, he submits, is what the adjudicator decided. I consider that Mr Stansfield is correct. The dispute referred to the adjudicator concerned sums due to PTB from ROK. Those sums were set out in a document referred to as a "final account" but, under the notes of the meeting, there is no final account; there are merely applications for payment. And the applications for payment in this case were to be treated no differently from other applications. In my judgment, the adjudicator was entitled to come to the decision he did on the dispute before him and, in doing so, he answered the question posed to him.

Summary

58. As a result, I find that ROK elected to treat the adjudicator's decision as binding and they are, therefore, precluded from approbating and reprobating the decision. In any event, in relation to the challenges to the enforcement of the decision made by ROK, I find that there was an agreement in writing, that the disputes fell within that one construction contract, that there were crystallised disputes, that the failure to comply with paragraph 7(2) of Part I of the scheme did not take the adjudication outside the scheme, that there was no breach of the rules of natural justice and the adjudicator did not answer the wrong question. Accordingly, I find that, despite the many grounds by which ROK has sought to challenge the adjudication and the adjudicator's decision, none of those grounds are sustainable and ROK has no real prospects of defending these proceedings under Part 24. PTB is therefore entitled to summary judgment and I shall hear submissions as to the precise sum, interest and costs.
59. I conclude by thanking both counsel for their succinct written submissions and for the efficient way in which they developed those submissions on the many points that I have had to consider.