| Date | 17 April 2002 |
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| Judgment | Chamberlain Carpentry & Joinery Limited -v- Alfred McAlpine Construction Limited, TCC 25 March 2002 |
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| The Issue | Setting the adjudicator's jurisdiction by reference to the notice of adjudication. |
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| Implication |
Whilst a notice of intention to refer remains an important document, the courts will generally give a purposeful interpretation of that document in support of the adjudication process. |
printA notice of intention to refer a dispute to adjudication is an important document. It sets the boundaries of the jurisdiction of the adjudicator, in that the adjudicator will not be empowered to deal with matters that are not embraced by the notice. This question of jurisdiction has become one of the most confrontational points in the adjudication process. It has often been stated by the courts that an adjudicator's decision will be valid and binding on the parties even though he has made a mistake in applying the facts or the law. If he lacks jurisdiction however, his decision will be worthless. Thus, lawyers have become particularly adept at making challenges to the jurisdiction of adjudicators. Fortunately, the courts have been equally adept at rejecting the unmeritorious arguments that have often been raised. An example is to be found in the case of Chamberlain Carpentry & Joinery -v- Alfred McAlpine Construction. McAlpine was engaged as main contractors for construction work at the Arora Hotel in Berkshire. Chamberlain was sub-contractor for various carpentry works. The sub-contract incorporated the DOM/2 standard form, with certain amendments. One of those amendments involved the incorporation of the Alfred McAlpine Special Projects Adjudication Rules (June 2000 Edition) in which, if they took the trouble to read the rules, sub-contractors would discover McAlpine's defiant attitude towards adjudication. Clause 26(1) of the Rules is an example: "The referring party shall be responsible for all of the costs of the parties incurred in the adjudication (including those of the adjudicator) on a full indemnity basis, save in circumstances where the referring party is McAlpine, in which case the parties shall bear their own costs . . ." Disputes arose between Chamberlain and McAlpine and, undaunted by the McAlpine adjudication rules, Chamberlain commenced adjudication by issuing a notice of intention in accordance with the rules. That notice enclosed Chamberlain's full referral submission. It indicated that a dispute had arisen between the parties, no agreement having been reached as to the value of its works on site. The notice listed seven matters which formed the basis of the dispute and also requested that the adjudicator make an ascertainment of the fair and reasonable costs incurred by McAlpine. (If Chamberlain was bound to pay these, it would be wise to at least ask the adjudicator to fix the amount.) The notice further confirmed that the redress sought by Chamberlain was "a decision as to the amount owing and due to Chamberlain". The matter proceeded to adjudication and the adjudicator awarded a sum of approximately £56,000 payable to Chamberlain. McAlpine refused to pay and the parties progressed to an action for enforcement of the decision. McAlpine resisted the enforcement by arguing two points in front of His Honour Judge Richard Seymour QC. Firstly, it was argued that what Chamberlain sought to refer to adjudication was not a dispute, but a number of disputes. Consequently, the notice of adjudication was invalid and the adjudicator had had no jurisdiction. Secondly, McAlpine argued that the notice of adjudication did not refer a claim for payment to adjudication. Requesting a "decision as to the amount owing", said McAlpine, was not the same as requesting an order to pay the amount owing. Judge Seymour dealt swiftly with these complaints. He considered that it was possible to contemplate both a substantial dispute with a number of different elements, which was nonetheless properly characterised as but one "dispute", and a situation in which the parties are in dispute simultaneously about a number of matters, but by no stretch of the imagination would any reasonable man say there was only one "dispute". The matter had to be looked at on its own merits. The fact that Chamberlain had asked the adjudicator to address the question of McAlpine's costs did not mean that more than one dispute had been referred. By virtue of the adjudication rules, fixing the costs to be paid by Chamberlain was an aspect of any dispute to which McAlpine was a party. Similarly, there was only one "dispute" (how much was due and payable) notwithstanding the listing of the various components of that dispute. In interpreting the notice of intention to refer, Judge Seymour noted that guidance should be taken from the words of Lord Hoffman in the case of Investors Compensation Scheme -v- West Bromwich Building Society, where it was stated that the principles for interpretation of a document included; "The ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties . . . The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as a meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean". Lord Diplock was also quoted from a 1985 Court of Appeal decision in which he said; "if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion which flouts business commonsense, it must be made to yield to business commonsense". Dealing with McAlpine's second point, Judge Seymour concluded that the notice of intention to adjudicate was sufficiently clear that the adjudicator had power to order payment from one party to the other and not merely power to make a declaratorily decision as to the amounts owing . In the result, McAlpine's objections were groundless. Chamberlain was entitled to judgment in the amount of the adjudicator's decision.
CJ-0215
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