In 2014 LJR Interiors Limited (LJR) undertook dry lining, plastering and screed works for Cooper Construction Limited (Cooper), under a written contract for approximately £19,000 plus VAT. Having submitted three applications for interim payment around the time the works were undertaken, approximately eight years after they were completed, LJR submitted (on 31 July 2022) a fourth application for payment for £3,256.58 plus VAT (Application 4). When Cooper did not respond to Application 4, LJR referred the matter to adjudication. Amongst other things, Cooper raised the defence of limitation in the adjudication, but the adjudicator considered that because under the Construction Act a dispute may be referred to adjudication "at any time", the relevant cause of action accrued in 2022 once the final date for payment of Application 4 had been missed by Cooper without service of a pay less notice and accordingly, there was no limitation defence. He found in favour of LJR.
LJR subsequently sought to enforce the adjudication decision and Cooper sought a declaration that the adjudicator's decision is void and unenforceable.
Decision
Judge Russen KC dismissed LJR's application and granted the declaratory relief sought by Cooper. In doing so he applied the test for resisting summary judgment set out in Hutton Construction Limited v Wilson Properties (London) Limited[1], which requires:
- A short and self-contained issue which arose in the adjudication and which the defendant continues to contest;
- no oral evidence; and
- which it would be unconscionable for the court to ignore.
He found that:
- As a matter of principle, a party may adopt a defence under the Limitation Act 1980 in adjudication.
- The adjudicator made an error in law by concluding that Application 4 was not statute barred.
- The court should not disregard such error, in particular because the limitation defence arose out of LJR's delay in making Application 4.
The judge noted at various points that Application 4 was not a typical application for payment made during the operation of a construction contract for the purpose of maintaining cashflow.
Key points
The general position in adjudication (because of the provisional nature of adjudication decisions and so as not to undermine the cash-flow objectives of the adjudication process) is that there is little scope to challenge the enforcement of an adjudicator's decision, even where the adjudicator's decision is wrong. This case provides scope for limitation arguments to form a basis for challenging enforcement of an adjudication and provides general commentary on the applicability of the Limitation Act 1980 to adjudication.
[1] [2017] EWHC 517
