C & B Scene Concept Design Ltd v Isobars Ltd

An adjudicator’s decision is ordinarily enforceable by summary judgment even if it contains an error of fact, law or procedure. The decisive question is whether the adjudicator determined the dispute referred, rather than whether the decision was legally correct. Jurisdiction derives from the agreed scope of the referral. A mistaken construction of the contract while resolving that dispute is an error within jurisdiction, not an excess of jurisdiction.

The statutory scheme under the Housing Grants Construction and Regeneration Act 1996 favours prompt, temporarily binding resolution. The underlying dispute may be reopened in litigation or arbitration, but a stay of enforcement requires a sufficient basis.

The claimant contractor referred a dispute about three interim-payment applications to adjudication under a JCT design-and-build contract. The parties had not selected either contractual interim-payment alternative. The adjudicator decided that the employer’s failure to serve timely payment and withholding notices required payment of the sums claimed.

The Technology and Construction Court dismissed the contractor’s application for summary judgment. The Recorder held that it was arguable that the contractual notice provisions had been replaced by the Scheme for Construction Contracts and that the adjudicator had therefore exceeded his jurisdiction by applying the wrong contractual provisions.

On the contractor’s appeal, the central issue was whether an adjudicator’s alleged error concerning the applicable payment provisions was a jurisdictional error which prevented enforcement, or an error of law made when deciding the dispute referred.

Sir Murray Stuart-Smith, with whom Rix and Potter LJJ agreed, allowed the appeal. The Recorder had wrongly treated the adjudicator’s possible error of law as an excess of jurisdiction.

1. The purpose of adjudication under section 108 of the Housing Grants Construction and Regeneration Act 1996 is the swift resolution of construction disputes on a temporarily binding basis. An adjudicator’s decision remains enforceable despite an error of procedure, fact or law. Such errors may be corrected only on the parties’ final determination by litigation or arbitration.

2. The Court approved the principles discussed in Northern Developments (Cumbria) Ltd v J & J Nichols and Sherwood v Casson, and applied the distinction approved in Nikko Hotels (UK) Ltd v MEPC plc [1991] 2 EGLR 103. An adjudicator who answers the right question wrongly acts within jurisdiction. A decision is a nullity only where the adjudicator answers a question not referred.

3. Jurisdiction was determined by the dispute which the parties had agreed to refer: the employer’s obligation to pay and the contractor’s entitlement following the three applications. Deciding whether clauses 30.3.3 to 30.3.6 applied, and the effect of the employer’s failure to give notice, was necessary to resolve that dispute. Even if the adjudicator had been wrong about those matters, the error did not affect jurisdiction. The same applied to the £1,500 claim for print and design work: its contractual entitlement was specifically referred and decided.

4. The Court deliberately did not decide whether section 110(3) had displaced all or only part of clause 30, or whether a failure to give notice prevented the employer advancing its substantive payment defences. It assumed those points in the employer’s favour because they were unnecessary to the jurisdictional issue.

5. There was no material supporting a stay of execution. Summary judgment was therefore entered for the contractor for £150,454.30, with costs.

• Court of Appeal (Civil Division): Allowed the contractor’s appeal and entered judgment for it: [2002] EWCA Civ 46.
• Technology and Construction Court: On 21 June 2001, Mr Recorder Moxon-Browne QC dismissed the contractor’s application for summary judgment, holding that the employer had an arguable jurisdictional defence.