Caledonian Modular Ltd v Mar City Developments Ltd

Adjudication decisions are generally enforced without reopening issues decided by the adjudicator. An exception arises where the issue is short, self-contained and capable of determination at a brief interlocutory hearing without oral evidence or further elaboration.

Payment and payee’s notices under the Housing Grants (Construction and Regeneration) Act 1996 and the Scheme for Construction Contracts must be stated with reasonable clarity. A contractor seeking the benefit of the automatic payment consequences of an employer’s late payless notice must clearly notify the employer that the payment period has been triggered. An account update during final-account negotiations is not necessarily a fresh interim payment application or payee’s notice.

The claimant sought to enforce a second adjudication decision awarding approximately £908,696. The adjudicator had treated documents sent on 13 February 2015 as a valid interim payment application or payee’s notice. The defendant argued that the documents were only an updated final-account position and that its later payless notice was therefore valid.

The court permitted the issue to be determined within the enforcement proceedings because the question was a short point of construction requiring no oral evidence. The central issue was whether the 13 February documents triggered the statutory and contractual payment regime.

1. Procedure. The general rule is that a party cannot resist enforcement by reopening the issue decided by an adjudicator, as illustrated by Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2000] BLR 522. However, a short and self-contained issue requiring no oral evidence may be decided by declaration at the enforcement hearing. The approach in Geoffrey Osborne v Atkins Rail Ltd [2010] BLR 363 supported that course.
2. Construction of the documents. The documents sent on 13 February 2015 were not a fresh interim application or a valid payee’s notice. Their meaning had to be assessed from both the contractual terms and the factual context, consistently with Maxi Construction Management Ltd v Mortons Rolls Ltd [2001] CILL 1784-1787; (2001) Scot (D) 12/8.
3. The documents did not state that they were a new application. They referred to an updated account and a final-account application summary, retained application number 15, and followed a valid payless notice issued only eight days earlier. The claimant’s later explanation also failed to identify them as a fresh claim when the defendant expressly asked what they meant.
4. The statutory payment regime requires sufficient clarity to alert the employer that the payment period has been triggered. The severe consequences of a late payless notice do not justify treating an ambiguous account update as a payment notice. The approach urged by the claimant would undermine the purpose of the statutory scheme by permitting repeated updates to revive sums already challenged by a valid payless notice.
5. The adjudicator failed to address the critical context, including application 15 and the earlier payless notice, and wrongly inferred that the defendant had treated the February documents as valid. The court declared that the documents were invalid notices and that no sums were due under adjudication 2. The admitted sum due under adjudication 1 remained payable.