OD Developments v Oak Dry Lining Ltd

An adjudicator’s jurisdiction depends on the contractual or statutory adjudication mechanism actually agreed by the parties. A notice need not expressly identify the contractual provision if the appointment and procedure are wholly consistent with the provision that exists. A conclusivity provision does not prevent an adjudication from commencing where its applicability or validity is disputed; those issues ordinarily concern the merits. A letter of intent contemplating a future executed JCT subcontract does not, without more, incorporate the JCT terms before execution. An adjudication conducted on the basis of contractual terms that were never incorporated is outside jurisdiction and cannot be enforced.

OD Developments, the main contractor, engaged Oak Dry Lining Ltd for dry-lining works under a letter of intent. The letter contemplated a future JCT 2011 Design and Build subcontract, but no complete subcontract was executed and its particulars were not completed.

Oak obtained an adjudicator’s decision awarding it £431,291.81. OD commenced a Part 8 claim challenging the adjudicator’s appointment, the existence of a dispute, the validity and conclusivity of OD’s final payment notice, and the incorporation of the JCT terms. Oak applied for summary judgment to enforce the decision. The principal issues were whether the adjudicator had been validly appointed and whether the JCT terms governed the adjudication.

1. Appointment and jurisdiction. The adjudicator had been appointed consistently with the adjudication provision in the letter of intent. Although Oak’s notice did not expressly refer to that provision, it sought adjudication under the Scheme and appointment by the RICS, exactly as the letter required. The case was distinguishable from Twintec Ltd v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC), where the appointment had been made under a contractual provision that had never existed. The objection to jurisdiction was rejected.
2. Final payment notice. A valid conclusivity provision would prevent contrary evidence being admitted, but would not prevent an adjudication from commencing. The parties disputed both the validity of the final payment notice and whether the JCT terms were incorporated. It was therefore a merits issue, not a jurisdictional bar. The court applied the reasoning in Marc Gilbard 2009 Settlement Trust (trustees of) v OD Developments and Projects Ltd [2015] EWHC 70 (TCC).
3. Incorporation. On the proper construction of the letter of intent, the parties contemplated either the letter operating on its own, with payment assessed on a fair and reasonable basis, or a later executed JCT subcontract containing completed particulars. The document did not provide a third possibility under which the JCT terms applied in the interim. The JCT terms were not incorporated. The court declined to decide hypothetical issues concerning alleged inconsistency between clause 1.8 and clause 4.12 or section 11 of the Act.
4. Effect on the adjudication. The adjudicator had proceeded on the mistaken basis that the JCT terms applied and had assessed the final payment notice under those terms. The court would not rework the decision to determine whether the same result might have followed from a fair and reasonable valuation, nor sever potentially valid parts. The adjudicator had no jurisdiction to decide the dispute on that contractual basis, and the decision could not be enforced.

Not stated in the judgment.