| Date | 27 June 2007 |
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| Judgment | David and Teresa Bothma (In Partnership) T/A Dab Builders v Mayhaven Healthcare Ltd [2006] Bristol TCC, 16 November 2006; Bothma (David & Teresa) (t/a DAB Builders) v Mayhaven Healthcare Ltd [2007] EWCA Civ 527, 14 May 2007 |
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| The Issue | Whether more than one dispute may be referred to adjudication and the basis upon which a party may reserve its position on jurisdiction. |
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| Implication |
Only one dispute may be referred to adjudication. Unless the responding party consents to the adjudicator deciding on more than one dispute, then an adjudicator who decides more than one dispute will be going outside his jurisdiction. A general reservation of the right to challenge jurisdiction may be good enough to allow a new challenge to jurisdiction to be raised after the decision has been reached. |
printWhen is a dispute not a dispute for the purpose of being able to adjudicate in accordance with the Housing Grants, Construction and Regeneration Act (1996) (‘the Act’)? There are a number of possible answers to this question, the most obvious being when the dispute arises out of a contract that is not a construction contract as defined by the Act, or when the dispute has not crystallised. However the answer considered by this article is when more than one dispute is referred to adjudication. Allied to this is the question of how and when a specific jurisdictional challenge may be made. Section 108 (1) of the Act states that: “A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section.” The right is limited to referring ‘a dispute’ not ‘a dispute or disputes’. The Scheme, where this is the applicable procedure for the adjudication, provides at paragraph 8(1) that: “The adjudicator may, with the consent of all the parties to those disputes, adjudicate at the same time on more than one dispute under the same contract". It is likely that if the referring party refers more than one dispute and the responding party responds to each without complaint then the consent is implied by conduct. If the adjudicator proceeds to reach a decision on all the disputes referred without such consent then there may be a challenge to his jurisdiction. The case law to date has indicated that in order to be able to rely on a particular jurisdictional challenge the party wanting to rely on it must raise it at the time it becomes apparent, not after the adjudication decision has been reached. But can a party reserve its position during the adjudication without identifying the specific ground that gives rise to the later challenge? This question came before the Court of Appeal in the case of Bothma v Mayhaven Healthcare Ltd. (2007). This case was an application for leave to appeal a decision reached in the TCC in Bristol by HHJ Havelock-Allan QC, concerning the enforcement of an adjudicator’s decision that determined disputes arising out of a JCT IFC 98 form of contract. The ‘Scheme’ was the procedure applicable to the adjudication. In April 2006, Bothma gave notice of adjudication identifying the following four disputes and sought a decision from the adjudicator in respect of each: "(i) The date for completion of the Contract,(ii) Scope and validity of Architect's Instructions issued to date, (iii) The issue and non-withdrawal of the Notice of Non-Completion, and (iv) The sum of Valuation Number Nine …"” The sum sought by the Contractor by Interim Claim 9 was based on a gross valuation of £440,531.74. One item in that valuation was: "Steel kitchen portakabin@£28.80 per week, £1296, 45 weeks [and an item of delivery]". The adjudicator decided each point and directed Mayhaven to pay Bothma the sum of £21,247.25 and 85% of the adjudicator’s fee. Mayhaven refused to make either payment and in the enforcement proceedings argued that what had been referred amounted to two distinct disputes and the adjudicator had gone beyond his jurisdiction in deciding both. Although Mayhaven did not raise this specific point during the adjudication, it did nevertheless reserve its position on jurisdiction in very broad terms as follows: “The following submissions are made entirely without prejudice to Mayhaven’s contention that you have no jurisdiction in this matter and that by making the following submissions Mayhaven do not in any way consent to your determining your own jurisdiction. Further, Mayhaven reserve their right to raise any jurisdictional issues and/or any other issues, whether mentioned below or not, in due course, whether within the forum of adjudication proceedings, arbitration proceedings or court proceedings.”The judge at first instance was satisfied that even though Mayhaven had not raised the specific two dispute point during the adjudication, this reservation was broad enough to allow it to do so during the enforcement proceedings and he decided that there was no waiver by Mayhaven of its right to rely on this challenge to jurisdiction. The judge also agreed with Mayhaven’s contention that there were in fact two disputes. Mayhaven argued that the real dispute was the amount payable under valuation number 9, and demonstrated that none of the sums claimed in the contractor’s application related to the issue of the completion date and extension of time. This was to be contrasted with application 10, made after the notice of adjudication in which an application for preliminaries was made. Accordingly, two disputes had been referred to the adjudicator and he had purported to determine them both. Bothma’s claim for summary judgment was refused and Bothma applied to the Court of Appeal for leave to appeal. The Court of Appeal was not asked to reconsider these decisions, but was asked by Bothma to consider a new point which had not been raised before that had the potential to bring the two disputes together, under the ambit of one dispute concerning payment. However, in the Court of Appeal, Lord Justice Dyson reviewed the judge’s decision at first instance and expressed the view that such decision on the question of waiver was correct, thus confirming that on the basis of the reservation, Mayhaven was able to rely on the new jurisdictional point. The Court of Appeal also agreed that application 9 was unconnected with the other three matters in the notice of adjudication and that there were two disputes. It then went on to consider the new point raised by Bothma who argued that application 9 did in fact include a time related sum for the kitchen portakabin which was therefore determined by the completion date and the extension of time issues. The Court of Appeal dismissed this argument on the basis that the portakabin was hired by Bothma for the use of Mayhaven in relation to its kitchen works that were to be completed after Bothma’s works and Mayhaven had agreed without dispute to pay the full cost of the portakabin. The leave to appeal was refused. These important decisions reinforce the need for a referring party to carefully frame the dispute which it refers. Failure to do so could lead to the responding party successfully raising a late challenge to jurisdiction. In such circumstances adjudicators may find it difficult to secure payment of their fees.
CJ-0725
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