ISG Retail Ltd v Castletech Construction Ltd

An adjudicator’s jurisdiction is defined by the dispute identified in the notice of adjudication, rather than by the remedy sought. A dispute concerning whether contractual performance has wholly failed is a dispute arising under the contract. Where advance payment has been made and consideration has totally failed through non-performance, repayment may be ordered in restitution as a remedy for breach of contract. The fact that restitution is distinct from damages, and may also arise from unjust enrichment where no contract exists, does not prevent an adjudicator awarding it for a contractual breach within the referred dispute.

ISG Retail Ltd applied for summary judgment to enforce an adjudicator’s decision requiring Castletech Construction Ltd to repay £35,000 plus VAT. ISG had alleged that Castletech had completely failed to perform its contractual obligations and that there had therefore been a total failure of consideration.

Castletech argued that the adjudicator lacked jurisdiction because restitution had not been claimed in the notice of adjudication and because restitution was an equitable remedy arising outside the contract. The central issues were whether the referred dispute arose under the contract and whether the adjudicator could award restitution for the contractual breach.

1. Jurisdiction. The adjudicator’s jurisdiction was determined by the dispute identified in the Notice of Adjudication. The central issue was whether there had been a total failure of consideration. That was a dispute arising under the contract, so the adjudicator had jurisdiction to determine it.
2. Remedy. The adjudicator was entitled to order repayment by way of restitution if that remedy was available for the breach found. Stocznia Gdynia SA v Gearbulk Holdings [2009] EWCA Civ 75 established that, following a total failure of consideration, a buyer who had paid in advance could recover the payment in restitution. The remedy was distinct from damages but remained an ordinary incident of a contractual claim involving total failure of consideration.
3. The distinction between the cause of action and the remedy did not determine jurisdiction. A claim in restitution based on unjust enrichment would fall outside the adjudicator’s jurisdiction if there were no contract. Where a contract existed, however, the adjudicator could award any remedy within his power to which the claimant was legally entitled for the contractual breach.
4. ISG was entitled to summary judgment. Costs and the form of relief were left for further agreement or determination.