This article summarises the judgment of Mr Justice Akenhead in Lorraine Lee v Chartered Properties (Building) Limited [2010] EWHC 1540 (TCC). The case concerned Ms Lee’s challenge to the validity of an adjudicator’s decision which required her to pay £79,929.30 plus interest. Chartered had served a Statutory Demand on Ms Lee based on this decision, leading Ms Lee to apply to have the Demand set aside and subsequently issue proceedings in the Technology and Construction Court.

The Court held the adjudicator’s decision was unenforceable owing to the fact it was issued out of time. It also found triable issues regarding the validity of the adjudicator’s appointment and whether a settlement had been reached, meaning summary judgment was not appropriate on either of those grounds.

Background to Dispute

Ms Lee engaged Chartered under a JCT Minor Works Building Contract 2005 dated 28 January 2008 for refurbishment works at her property in Hampstead 🎶down at the Old Bull and Bush 🎶. The contract sum was £239,662.45, and the works were due for completion by 1 August 2008. Article 6 of the contract provided for adjudication, with the statutory Scheme for Construction Contracts applying and the RIBA as the nominating body.

The works were practically complete by 17 September 2008. Chartered submitted its final account in January 2009, claiming a net sum of over £70,000 plus VAT. Ms Lee disputed the final account, alleging errors and inflated demands. Discussions between Ms Lee’s Architect and Chartered led to a point in early May 2009 where Chartered was prepared to drop its claim if Ms Lee dropped her cross-claims. This agreement was never finalised and so Chartered initiated adjudication proceedings. After two aborted adjudications, a third Notice of Adjudication was served on 30 September 2009, and the RIBA nominated Mr. Slegg as the adjudicator.

The adjudicator’s decision dated the 13 November 2009 was issued on 16 November ordering Ms Lee to pay £39,265.09 for the final account, £6,600.00 VAT, £2,093.18 interest, £5,508.00 costs and £21,246.75 “in respect of 95% of his fees“.

Invalid Appointment of Adjudicator

On enforcement Ms Lee argued that Chartered requested the RIBA to nominate the adjudicator before serving the notice of adjudication on her, which would be a breach of the Scheme and render the appointment invalid. The judge found a “real factual doubt” regarding the precise timing of these events. The judge stated: “In the absence of proper explanations from Mr Reeves [Chartered’s Representative] which he should clearly be given the opportunity to give, it would not have been unreasonable to infer that Chartered must have delivered the request to the RIBA before it gave its notice of adjudication” [18(e)]. As this was a triable issue with potentially serious implications (deliberately misleading the Court), summary judgment on this point was not possible.

Crystallisation Point

Ms Lee contended that no dispute had crystallised before the referral to adjudication. The judge reviewed the principles established in Amec Civil Engineering Ltd v Secretary of State for Transport regarding when a dispute arises. He concluded that a dispute had arisen by 30 September 2009, citing the submission and discussion of the final account in January 2009, the lack of a final certificate, the significant difference between the interim and final account values, and the fact that Ms Lee had delegated responsibility for the final account to her architect.

The judge stated: “The fact that no final certificate had been issued before the referral to adjudication, that is within a period as long as about eight months after the submission of the final account gives rise to the clear inference that there were issues between Ms Lee’s Architect and Chartered on the whole claimed net outstanding sum.” [20]

Multiple Disputes Point

Ms Lee argued that the Notice of Adjudication referred multiple disputes, contrary to the Scheme without agreement. The judge rejected this, stating that the underlying dispute was the disputed final account and the various listed items were causes or issues within that single dispute. He emphasised a broad interpretation of ‘dispute’ in the context of construction adjudication: “The fact that within the overall dispute there are numerous issues does not mean that there is more than one dispute. Parliament can not have intended… that the word “dispute” should be construed anything other than reasonably broadly…” [21]

No Dispute

In the alternative, Ms Lee argued that the exchange of emails in early May 2009 constituted a settlement of all claims and cross-claims, meaning no referable dispute existed. The judge found a strong triable issue on this point, highlighting the commercial surprise of Chartered pursuing claims they seemed prepared to abandon, the factual discrepancies regarding attempts to secure withdrawal letters, and the beliefs of Ms Lee and her Architect that a settlement had been reached. Again, this point was not suitable for summary judgment.

The judge stated: “The e-mails properly analysed in the light of that factual background could be interpreted as meaning and confirming a full and final settlement of all claims and cross claims with any requirement, contractually enforceable, that each party formally confirms in writing that they withdraw their respective claims against each other.” [22]

Breach of Natural Justice

Further, Ms Lee argued a breach of natural justice due to the adjudicator not adequately considering her jurisdictional challenges and the process being an ambush. The judge disagreed, stating that an adjudicator has the right to investigate their jurisdiction but not necessarily to decide it. He also rejected the ambush argument, noting the long-standing dispute over the final account and Ms Lee’s act of seeking assistance from her architect. The judge emphasised Parliament’s intention that either party has the right to refer a dispute to adjudication at any time.

Decision Issued Out of Time

With an extension of time agreed, Friday 13 November 2009 was the deadline for the adjudicator to reach his decision. The adjudicator emailed on 12 November 2009 stating he anticipated finalising the decision by midday on 13 November 2009 but it might not be emailed until Monday 16 November 2009 due to typing and proofreading. Mr Reeves for Chartered consented, but there was no agreement from Ms Lee. The adjudicator’s decision was dispatched by email late on 16 November 2009 but stated it was “Made the 13 November 2009 under my hand.”

The judge reviewed extensive case law and cited Coulson J’s Judgment in Cubitt Buildings in respect of a two-stage process to reach and communicate the Decision:

He concluded that while the decision was likely reached by 13 November 2009, it was not delivered as soon as possible after that date. The delay of approximately three days (including a weekend) lacked good reason or explanation, especially given the adjudicator’s experience and the potential for prompt typing and proofreading. That delay rendered the decision unenforceable.

Conclusion

This case reinforces the strict adherence required to the statutory or agreed timelines in adjudication, both for reaching and delivering the decision. Failure to deliver the decision “as soon as possible” after it is reached, even if the reaching is within time, can render it unenforceable.

The case also highlights the importance of clear and unambiguous communication between parties, especially regarding potential settlements and extensions of time in adjudication. The lack of explicit agreement from Ms Lee regarding the delayed delivery proved significant.