OSC Building Services Ltd v Interior Dimensions Contracts Ltd

In adjudication enforcement proceedings, the scope of a dispute is determined by construing the notice and referral in their commercial and factual context. A reference to non-payment of a final account may encompass both the sum accepted by the paying party and an additional sum claimed, particularly where the relief leaves the precise amount open. A party which participates in an adjudication without protesting the adjudicator’s jurisdiction will generally be treated as having submitted to that jurisdiction, although that observation was provisional and unnecessary to the decision. The substance of the parties’ dealings prevails over labels: a document described as a draft final account may be treated as an interim payment application where the surrounding conduct supports that construction.

OSC Building Services Ltd applied under Part 24 to enforce an adjudicator’s decision requiring Interior Dimensions Contracts Ltd to pay money arising from subcontract works at the Leigh Medical Centre.

IDC resisted enforcement on two jurisdictional grounds. It argued that the referral enlarged the dispute identified in the notice of adjudication by requiring valuation of the final account. It also argued that the adjudicator had decided an interim payment application, whereas the referred dispute concerned the final account. The subcontract did not contain compliant adjudication provisions or a compliant interim payment mechanism, so the Scheme for Construction Contracts applied.

1. Scope of the reference. The notice and referral had to be read against the prior exchanges concerning submissions, comments and assessments. The dispute was what sum was due when the notice was issued. The reference to non-payment in respect of the final account encompassed both the sum based on IDC’s assessment and OSC’s additional claim. The alteration of the figure in the referral did not enlarge the dispute because the notice itself sought such other sum as the adjudicator might decide.
2. Unraised jurisdiction objection. The authorities supported the principle that a party submitting to an adjudicator’s jurisdiction without protest accepts the submission of the particular issue. IDC had participated fully and had raised no objection to this aspect. That conclusion was, however, unnecessary to the decision on the first ground and was expressed provisionally.
3. Final account and interim application. In many contracts there is an important distinction between interim applications and final accounting. On the facts here, application number 10, although called a draft final account, was in substance the last interim application. The correspondence showed that a true final account remained to be compiled, and IDC subsequently made further interim payments. The absence of a compliant contractual interim payment mechanism also meant that the Scheme supplied the relevant entitlement.
4. Disposition. The adjudicator had jurisdiction to decide the application as an interim payment application. Neither ground for resisting enforcement was made out, and IDC had no real prospect of establishing otherwise. The court therefore upheld enforcement in principle and proceeded to hear argument on the sums due and ancillary matters.

Not an appeal. The judgment itself records no prior judicial decision in the dispute.