Working Environments Ltd v Greencoat Construction Ltd

An adjudication dispute may crystallise before the contractual payment date. A disagreement about the valuation of interim work is capable of referral once the paying party has assessed the application and the assessment has been challenged.

The crystallised dispute includes the responding party’s substantive defences and set-offs forming part of that assessment. A party may adjust the amount of an existing claim or cross-claim during the adjudication, within reasonable limits, but cannot introduce a new dispute that had not previously been raised. Where distinct parts of an adjudicator’s decision are severable, a jurisdictional defect affecting some items does not necessarily invalidate the remainder.

Working Environments Ltd, a mechanical-services subcontractor, referred a payment and valuation dispute to adjudication after Greencoat Construction Ltd certified substantially less than the amount claimed in Interim Application No. 10 and identified withholding items. The referral occurred before the contractual final date for payment.

The adjudicator assessed the works, variations and set-offs and identified a net amount due. Greencoat resisted enforcement, contending that no dispute had crystallised, that the adjudicator could not determine payment before the payment date, and that later withholding items fell outside the reference. The central issues were the scope and timing of the crystallised dispute and whether the decision could be enforced in part.

1. Crystallisation. A dispute had crystallised when Greencoat assessed the interim application and Working Environments challenged that assessment. It was immaterial that the contractual payment date had not arrived. An interim valuation can be disputed and referred to adjudication before the payment date, allowing the dispute to be resolved in time for payment.
2. Scope of the reference. The dispute encompassed the essential claim as to the amount due, together with the withholding items advanced by Greencoat as set-offs. The first nine items were already within the certificate and remained within the adjudicator’s jurisdiction, notwithstanding that some amounts were adjusted in later documents. Item 10, liquidated damages, had also been identified before the referral, although its amount was initially unquantified, and therefore fell within the crystallised dispute.
3. Items 11 and 12 were new claims first introduced 22 days into the adjudication. Greencoat had expressly reserved its jurisdictional position. The adjudicator therefore had no jurisdiction to determine those items.
4. Severance and enforcement. The jurisdictional error concerning Items 11 and 12 did not infect the remainder of the decision. Consistently with the guidance in