Pegram Shopfitters Ltd. v Tally Weijl (UK) Ltd.

An adjudicator’s decision cannot be summarily enforced where the defendant has a properly arguable jurisdictional objection with a realistic prospect of success. The policy of speedy interim payment requires courts to scrutinise such objections critically, but it does not override legal principle.

Where the adjudicator’s jurisdiction depends upon the existence and terms of a written construction contract, a genuine dispute about whether any such contract was concluded may have to be determined before enforcement. Uncertainty about which contractual terms apply does not itself cause the statutory Scheme to govern. The Scheme applies only if the contract exists and fails to contain compliant adjudication provisions.

A shopfitting contractor obtained an adjudicator’s award for £115,015.50 following a dispute over the value of refurbishment works. The employer maintained that any contract incorporated the JCT Prime Cost terms and their adjudication procedure. Alternatively, it contended that no written contract had been concluded. The contractor maintained that its own terms governed, in which case the statutory Scheme applied.

The Technology and Construction Court gave summary judgment enforcing the award: [2003] BLR 296. It held that both parties had accepted the existence of a construction contract, that the employer could not resile from that position, and that the Scheme applied because the applicable contractual terms could not readily be ascertained.

The central issue on appeal was whether the employer had a realistic prospect of establishing that the adjudicator lacked jurisdiction because there was no qualifying written construction contract or because the adjudicator had been appointed under the wrong procedure.

1. Appeal allowed unanimously. The order summarily enforcing the adjudicator’s decision was set aside.

2. Lord Justice May held that the judge had wrongly treated the parties as agreeing that their relationship was necessarily governed by a written construction contract. The employer had consistently advanced two alternatives: a contract incorporating the JCT Prime Cost terms, or no concluded contract at all. The second contention was neither inconsistent with its position before the adjudicator nor barred by estoppel.

3. The adjudicator’s statutory jurisdiction depended upon the contractor establishing its own account of the contract. If the JCT terms governed, the contractual adjudication procedure applied instead of the statutory Scheme. If no contract had been concluded, there was no written construction contract within section 107 of the Housing Grants, Construction and Regeneration Act 1996. The Scheme therefore did not apply. The adjudicator had wrongly treated a possible entitlement to a quantum meruit as if it were itself a written construction contract.

4. The existence and terms of the contract were also essential to the substantive valuation dispute. The contractor’s conditions and the JCT Prime Cost terms prescribed materially different bases of remuneration. The adjudicator had not resolved that issue, although it was necessary both to jurisdiction and to a proper assessment of the monetary claim.

5. The lower court’s extended construction of section 108 was rejected. A dispute about which contractual terms apply does not itself mean that the contract fails to comply with section 108 and that the Scheme consequently applies. That approach avoids the prior question whether a qualifying contract exists and which adjudication provisions it contains.

6. The policy of the legislation is speedy provisional adjudication and enforcement pending final resolution. Courts should therefore examine jurisdictional objections critically. Nevertheless, summary enforcement must be refused where a properly arguable jurisdictional objection has a realistic prospect of success. Both contractual alternatives advanced here were genuine, and the employer had participated under an express reservation without submitting to the adjudicator’s jurisdiction.

7. Lady Justice Hale agreed. Without deciding the contractual issue, she considered that the most likely analyses were either a contract, or a quasi-contractual claim for a quantum meruit where no price had been agreed. Neither analysis necessarily produced a written contract within section 107. Mr Justice Hooper agreed that the appeal should be allowed.

• Court of Appeal (Civil Division): The employer’s appeal was allowed unanimously and the summary-enforcement order was set aside: [2003] EWCA Civ 1750 .
• Technology and Construction Court: His Honour Judge Thornton QC granted the contractor summary judgment for £115,015.50, together with interest and costs, enforcing the adjudicator’s award: [2003] BLR 296. The judge granted permission to appeal.
• Adjudication: The adjudicator awarded the contractor £115,015.50 under the statutory Scheme. The employer had participated under protest and disputed his jurisdiction.