Lane End Developments Construction Limited v Kingstone Civil Engineering Limited [2020] EWHC 2338 (TCC) concerned a challenge by Lane End seeking a declaration that the adjudicator’s decision should be set aside. The core issues revolved around the invalidity of the adjudicator’s appointment and the invalidity of the adjudicator’s unilateral resignation. This article focuses on the timing of the request for the adjudicator and specifically, the principle of waiver by election in adjudication.

Factual Background

Lane End engaged Kingstone to undertake enabling works under a contract that incorporated the Scheme. On 20 March 2020, Kingstone sent a notice of adjudication to Lane End in respect of a default payment notice dispute valued at £356,439.19. However, Kingstone sent the request for an adjudicator three hours earlier.

Following the referral, on 24 March 2020, Lane End challenged the adjudicator’s nomination contending that Kingstone had failed to submit a notice of adjudication. It did not take the point about the timing of the notice. The adjudicator reached his decision finding that Kingstone’s payment application was the notified sum and deciding payment thereof was overdue.

Validity of Appointment

Lane End argued before the court that the adjudicator was not validly appointed because Kingstone’s request for the adjudicator’s nomination preceded the service of the notice of adjudication and paragraph 2(1) of the Scheme states that the referring party “shall request the person… following the giving of a notice of adjudication.” Relying on the precedent of Vision Homes Ltd v Lancsville Construction Ltd [2009] BLR 525, which established that the request for an adjudicator must follow the notice, the judge stated that since the adjudicator “was not appointed under a request that was duly issued under Paragraph 2(1) of the Scheme, I am satisfied that he was not validly appointed as adjudicator and, subject to Kingstone’s submissions based on waiver and estoppel, he did not have jurisdiction to make the 27 April Decision.”

Waiver by Election

The judge defines ‘waiver by election’ as when a party, knowing of alternative inconsistent rights and the facts giving rise to them, acts in a manner consistent with choosing one right, thereby losing the other. The judge continues by citing Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850: “this principle is capable of applying to statutory procedural requirements if imposed solely for the protection or benefit of one party“. It is of note that this appears to be the only time that Kammins has been cited in adjudication enforcement to argue waiver by election.

Even though the judge found that Lane End did not have knowledge of the facts to make an election (Lane End was unaware that the request had been sent before the notice until after the adjudicator’s decision) the court considered whether this type of defect is even capable of waiver by election.

Lane End argued that the defect in adjudicator’s appointment was a fundamental jurisdictional nullity, not a mere procedural irregularity capable of waiver. In support of this proposition, Lane End relied on the commentary at paragraph 4.35 of Coulson on Construction Adjudication (4 edn): “Paragraph 2(1) makes plain that the first thing that must happen is the giving of the notice of adjudication. Only after that does the procedure involving the nominating body come into play”. Lane End also cited Ecovision Systems Ltd v Vinci Construction UK Ltd [2015] EWHC 587 [92]: “any step taken before issue of the Notice of Adjudication is a step taken before proceedings have been commenced and for that reason is a nullity”. The judge agreed with Lane End and found that the defect was not merely procedural and therefore not susceptible to waiver by election. The judge found that “this is not a case in which he was appointed as adjudicator but there was a defect in the process of appointment and adjudication. He was not appointed to act in the adjudication at all“.

Discussion on Waiver by Election

The judge says of the defect: “it was more than procedural”; “there was a defect in the process of appointment and adjudication”; and the adjudicator “was not appointed to act in the adjudication at all”. What then, you might ask, is the type of statutory procedural requirements from Kammins that would be capable of a waiver by election?

The judgment suggests there are two categories of threshold jurisdictional defects: (i) those that are “merely procedural”; and (ii) those that are more fundamental. For example, not serving the notice of adjudication at the address stated in the contract might be a procedural defect that is not a fundamental jurisdictional defect, and such a decision would not be a nullity.

What about if both parties wanted to continue in the face of a fundamental defect. Well, the fact that the adjudicator will have no jurisdiction to act and therefore an ‘election’ is not in play, the adjudicator must proceed with caution as an aggrieved party would have an opportunity to challenge enforcement. Therefore, if the adjudicator is to proceed, they might seek ad-hoc jurisdiction while patently establishing the rules of engagement.