Horne v Magna Design Building Ltd

In adjudication enforcement proceedings, jurisdiction is determined primarily by the Notice of Adjudication, read with the dispute which had crystallised and the parties’ preceding communications. A defending party may raise any matter of law or fact, whether previously raised or not, although the matter may fail as a substantive defence. An adjudicator asked to determine a contractor’s entitlement to payment does not necessarily have jurisdiction to determine a separate net account in the employer’s favour. The scope of the referred dispute remains decisive. Where the adjudicator has not actually determined the employer’s account, and has only described it as an approximate likely entitlement, the court cannot enter summary judgment for that amount.

Roland Horne engaged Magna Design Building Ltd under a JCT Minor Works Building Contract 2011. Horne purported to terminate Magna’s employment and Magna then commenced an adjudication seeking payment of an outstanding invoice balance. The adjudicator decided that the termination was valid and that Magna was not entitled to the amount claimed. He declined jurisdiction to determine whether Horne was entitled to a net sum under the contractual termination account, although he indicated that Horne’s account appeared to approximate a possible entitlement.

Horne sought summary judgment enforcing the adjudicator’s fee decision, a declaration that the adjudicator had jurisdiction to award him £27,164.79, and judgment for that sum. The central issues were the scope of the adjudication and whether the adjudicator had actually determined Horne’s alleged net entitlement.

1. The court held that the Notice of Adjudication is the starting point for identifying the dispute. The court must also consider whether the dispute had crystallised before the notice and may examine preceding communications to establish its proper scope. The notice is not invariably conclusive if the surrounding circumstances show that the dispute was broader or differently formulated.

2. A defending party may raise any legal or factual matter in answer to the referred claim, even if it was not previously raised. That matter may fail as a substantive defence, for example because contractual or statutory withholding notice requirements were not met, but that does not deprive the adjudicator of jurisdiction to consider it.

3. The court distinguished Workspace Management Ltd v YJL London Ltd [2009] EWHC 2017 (TCC), [2009] BLR 497. There, the adjudication concerned the broad valuation of a certificate, so the adjudicator’s valuation necessarily extended to the balance of the parties’ account. Here, Magna’s notice concerned its claim for an outstanding payment, defended on the basis that Horne had validly terminated its employment. The referred dispute did not encompass Horne’s claim for a net sum.

4. The adjudicator was entitled to consider Horne’s later accounting documentation when deciding whether Magna had any entitlement. However, he did not determine that Horne’s account satisfied the contract or that £27,164.79 was due. His assessment was only that the account was a close approximation of what he might have found had the matter been referred for determination. It was therefore neither possible nor fair for the court to enter summary judgment for that sum.

5. Horne was entitled to judgment for the adjudicator’s fees and related solicitor’s costs, totalling £4,932 plus interest. The court allowed £3,000 for costs, reflecting that Horne lost on the major issue.