Three times one equals one: Several disputed payment applications amount to a single dispute

Michael Comba considers a case in which the High Court dismissed an employer’s argument that an adjudicator lacked jurisdiction because the referral concerned three separate payment applications and, therefore, comprised three separate disputes.

Quadro Services Limited v Creagh Concrete Products Limited[2021] EWHC 2637 (TCC).

The facts

Quadro Services Limited (the Contractor) entered into an oral contract with Creagh Concrete Products Limited (the Employer). The Contractor made payment applications throughout the contract and raised invoices for the amounts claimed. Three invoices totalling approximately £40k were not paid by the Employer.

For two of the invoices, the Employer had previously approved the content of the respective payment applications; however, it did not pay these invoices nor issue a pay less notice. For the remaining invoice, the Employer had made no response, had not paid, and had not issued a pay less notice. The Contractor referred the matter to adjudication.

The Employer made only one argument in defence, that the adjudicator lacked jurisdiction. The Employer’s reasoning was that the matter concerned three separate payment applications and so comprised three separate disputes. Because an adjudicator only had jurisdiction to determine a single dispute, the Employer invited him to resign. The adjudicator declined and found in favour of the Contractor.

The judgment

The court considered the jurisdiction argument in line with the principles in Witney Town Council v Beam Construction (Cheltenham) Limited[1]. As was noted by the Employer, in Witney the judge had noted a ‘rule of thumb’ that:

 “…if disputed claim No 1 cannot be decided without deciding all or parts of disputed claim No      2, that establishes such a clear link and points to there being only one dispute.”

The court accepted that this rule of thumb could be applied to this case and found that each of the payment applications and their validity could be decided independently from each other. However, the court also noted Prater Limited v John Sisk & Son (Holdings) Limited[2] in which it was noted that:

“Clearly a single dispute in the context of a construction contract may include several distinct issues… One needs to look at the facts of each case and to use some common sense.”

The court held that on these facts (and using common sense) there was a single dispute, which was whether the Contractor was owed the sums due from the outstanding invoices.

It was also noted that the Employer’s argument would have meant that, where several payment applications were in question, parties would need to commence individual adjudications. This would have been contrary to public policy as adjudication is designed to offer efficient and cost-effective dispute resolution, particularly in respect of payment disputes.

Analysis

This case should remind parties and practitioners that the meaning of a ‘single dispute’ should not be taken overly literally. It is common for a dispute to concern several sub-issues and the courts will tend towards common sense when determining whether a single dispute has arisen.

The courts will also have the wider aims of adjudication in mind when determining enforcement proceedings. Adjudication is designed to be a quick form of ‘rough justice’; convoluted arguments that run contrary to this will be given short shrift.

[1] [2011] EWHC 2332 (TCC).

[2] [2021] EWHC 1113 (TCC).