Harding (t/a M J Harding Contractors) v Paice & Anor

An earlier adjudication precludes a later adjudication only to the extent that the earlier adjudicator actually decided the same or substantially the same dispute. The referred dispute and the earlier decision must both be examined.

Where an employer fails to serve a valid Pay Less notice against a final account following termination, it must pay the notified sum. That payment does not conclusively determine the proper valuation of the account. The employer may subsequently refer the valuation, including its counterclaims, to adjudication or litigation.

A building contractor submitted an account following termination of a construction contract. The employers failed to serve a valid Pay Less notice. In the third adjudication, the adjudicator ordered payment of the notified sum but expressly declined to decide whether it represented the correct valuation.

The employers then sought a further adjudication of the account's true value. The Technology and Construction Court refused the contractor's applications for an injunction and declarations restraining that adjudication. The contractor appealed, contending that paragraph 9(2) of Part I of the Scheme barred reconsideration of the account.

The central questions were how paragraph 9(2) identifies a repeated dispute and whether the third adjudicator had determined the account's proper value.

1. Appeal dismissed. Paragraph 9(2) of Part I of the Scheme requires an incoming adjudicator to consider both the dispute referred previously and what the earlier adjudicator actually decided. The word “decision” means a decision relating to the dispute now referred. Matters referred but left undecided are not barred from a later adjudication: Quietfield Ltd v Vascroft Construction Ltd [2006] EWCA Civ 1737 applied.

2. The third referral presented two alternative issues. The first was whether the absence of a valid Pay Less notice made the notified sum immediately payable. The second was the proper valuation of the termination account. The adjudicator decided the first issue and expressly stated that he had not decided the merits of the valuation. The second issue therefore remained open.

3. The employers' failure to serve a valid Pay Less notice under section 111 of the Housing Grants, Construction and Regeneration Act 1996 required them to pay the sum shown in the contractor's account. The consequence was limited to immediate payment. It did not establish that the sum represented the amount properly due under the account or prevent the employers from later challenging the valuation.

4. There was a fundamental distinction between the present final account following termination and the interim-payment context considered in ISG Construction Ltd v Seevic College [2014] EWHC 4007 (TCC). The contract required an assessment of the amount properly due and permitted a negative valuation. The reasoning in Watkin Jones & Son Ltd v Lidl UK GmbH [2002] EWHC 183 (TCC), Rupert Morgan Building Services (LLC) Ltd v Jervis [2003] EWCA Civ 1563 and Galliford Try Building Ltd v Estura Ltd [2015] EWHC 412 (TCC) supported that conclusion.

5. The employers were accordingly entitled to refer the proper valuation of the account, including their counterclaims, to a further adjudication. The contractor could retain the payment already received unless and until a later adjudicator or court arrived at a different valuation.

1. Court of Appeal (Civil Division): The contractor's appeal was dismissed. The employers remained entitled to refer the proper valuation of the termination account to a further adjudication.
2. Technology and Construction Court: Edwards-Stuart J dismissed the contractor's claims for an injunction and declarations restraining the fourth adjudication. No neutral citation for that decision is stated in the judgment.