C Spencer Ltd v MW High Tech Projects UK Ltd

An adjudicator may handle a hybrid construction contract containing included and excluded operations, provided that the dispute determined relates only to included construction operations. A party cannot rely on unsubstantiated counterclaims as a defence while simultaneously denying the adjudicator jurisdiction to value them. Under a contractual payment regime reflecting the Housing Grants Construction and Regeneration Act 1996, set-off or counterclaims intended to reduce the notified sum must be advanced through a valid pay less notice. Where successive adjudications have addressed connected matters, a party cannot approbate and reprobate by accepting jurisdiction in one adjudication and denying it in another. The court rejected challenges to the adjudicator’s appointment, the treatment of counterclaims, retention, and interest, and entered summary judgment enforcing the adjudicator’s decision.

The claimant subcontractor sought summary judgment enforcing the adjudicator’s decision in adjudication no 4, which required the defendant main contractor to pay approximately £3.397 million, together with interest and the release of retention monies.

The subcontract was a hybrid contract. It covered both construction operations within the Housing Grants Construction and Regeneration Act 1996 and excluded operations. The defendant challenged enforcement on three grounds: invalid notification and appointment; impermissible treatment of four counterclaims said to concern excluded operations; and impermissible determination of retention covering both included and excluded work.

The dispute arose against earlier decisions concerning payment application no 32 and notice no 35, including the first-instance judgment in CSL v MW at [2019] EWHC 2547 and the Court of Appeal decision at [2020] EWCA 331.

1. Summary judgment. The application succeeded. None of the defendant’s objections had a real prospect of success, and the adjudicator’s decision was enforceable.
2. Notification and appointment. Clauses 3.1 and 4.3 of the Grey Book did not require the notice of adjudication and the request for nomination to be sent sequentially. Sending both documents at the same time was valid. Notice was also validly given by copying the defendant into an email addressed to the appointing body, where the email identified the adjudication and included the necessary documents. The defendant acted on the notice immediately.
3. Hybrid contract and counterclaims. It was common ground that an adjudicator could handle a hybrid contract, but could not determine a dispute relating to excluded operations. The adjudicator had not valued the four counterclaims on their merits. He had removed them from the adjudication after the defendant expressly declined to rely on them as set-off. Notice no 35 was a certificate under clause 38.4, not a pay less notice under clause 38.7. Any set-off or counterclaim intended to reduce the amount payable therefore required a valid pay less notice, which had not been served. The adjudicator was not required to take the counterclaims into account.
4. Excluded operations. In any event, the counterclaims did not concern excluded operations. Applying the narrow and broad approach required by section 105(2)(c) of the Housing Grants Construction and Regeneration Act 1996, a concrete inertia slab was not plant, machinery, or the relevant steelwork merely because it supported plant or contained possible fixings.
5. Retention and interest. The adjudicator had jurisdiction to determine release of the retention. The defendant had accepted jurisdiction over connected completion and retention issues in adjudication no 3 and could not adopt an inconsistent position in adjudication no 4. The second half of the retention was properly treated as falling due when the final certificate could first have been sought. Interest followed from the earlier valid findings.

Judgment was entered for the claimant for the sum awarded by the adjudicator.

The judgment describes earlier stages in the same dispute:

• High Court: CSL v MW, [2019] EWHC 2547. The claimant’s earlier application concerning notice no 35 failed.
• Court of Appeal: CSL v MW, [2020] EWCA 331. The Court of Appeal upheld the first-instance decision.
• High Court (Technology and Construction Court): The present court granted summary judgment enforcing adjudication no 4.