Penten Group Ltd v Spartafield Ltd

An adjudicator’s jurisdiction is determined by the nature, scope and extent of the dispute identified in the notice of adjudication. Where a notice raises the existence of a construction contract, the adjudicator may need to determine the terms necessary to establish that contract, including an alternative set of terms raised in the response. A party cannot artificially restrict the opposing party’s defence by omitting a matter from the notice. A dispute about contractual terms and the financial claims arising under those terms will ordinarily be a single dispute. A second adjudicator cannot reopen a matter already decided, although the precise scope of the earlier decision must be identified.

Spartafield engaged Penten to carry out building works under a letter of intent. The parties intended to enter into a JCT ICD contract, but no such contract was concluded. After termination, Spartafield commenced an adjudication seeking declarations that a valid contract existed, that it incorporated ICD terms, and that sums were payable.

The adjudicator found that a valid contract existed, but that it was governed by the letter of intent rather than the ICD terms. Penten paid the sums ordered. Spartafield then issued further notices seeking to advance alternative contractual terms and claims. Penten sought declarations concerning the binding effect and jurisdictional consequences of the first decision. The central issues were whether the adjudicator had jurisdiction to find that the letter of intent governed the contract and whether the proposed further adjudication referred matters already decided or more than one dispute.

1. The principal issue. The adjudicator had jurisdiction to decide that the parties’ valid construction contract was governed by the letter of intent rather than the ICD terms. The notice sought a declaration concerning the existence of a valid construction contract. That question could not sensibly be answered without deciding what basic terms had been agreed.
2. The letter of intent was squarely in issue in the first adjudication. Penten relied on it in its response, and Spartafield addressed that case in its reply and surrejoinder. A referring party cannot use the wording of its notice to deprive the responding party of an otherwise available defence. The approach in Pilon Ltd v Breyer Group PLC [2010] EWHC 837 (TCC) supported that conclusion.
3. Having decided that the ICD terms had not been incorporated, the adjudicator was entitled to determine the alternative contractual terms. Spartafield could not advance a further, unparticularised contractual alternative in a new adjudication without first challenging the earlier decision in litigation. The decision remained binding unless and until successfully challenged.
4. A second adjudicator could not decide what the first adjudicator had already decided. Accordingly, the proposed adjudication could not reopen whether the contract incorporated terms other than those in the letter of intent. However, the court declined to grant a declaration in terms wide enough to catch every matter mentioned in the later notice, because its exact scope had not been established. The principle was illustrated by Quietfield Ltd v Vascroft Construction Ltd [2007] BLR 67 and Benfield Construction Ltd v Trudson (Hatton) Ltd [2008] EWHC 2333 (TCC).
5. In an ordinary case, a dispute about the contractual terms and a dispute about the financial claims under those terms form a single dispute. Treating them as separate disputes would make adjudication unworkable. The court also observed that, following the statutory change permitting adjudication where the contract was not wholly in writing, adjudicators may require latitude when resolving contractual and financial issues within the statutory timetable.
6. The appropriate declaration was that, unless and until challenged in litigation, the parties were bound by the first adjudication decision that their contract was governed by the letter of intent and not the ICD terms.