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Published 19 December 2014
Mr Justice Akenhead rejected an Employer's application for declaratory relief, finding that a dispute referred to an adjudicator did not include the Employer's claim to a net sum under the contract and that the adjudicator correctly decided that he did not have jurisdiction to award that net sum.
This judgment reiterates the need for parties to an adjudication to carefully consider the scope of the dispute referred to adjudication and for adjudicators to consider all the defences that are advanced, whether they had been specifically raised previously or not.
By way of a JCT Minor Works Building Contract, 2011 Edition, Mr Horne employed a building contractor, Magna Design Building Ltd ("MDB"), to carry out works to the former's flat.
In January 2014, Mr Horne served a notice of default on MDB for failing to proceed regularly and diligently with its works. MDB failed to return to site to complete its works and therefore Mr Horne served a further notice on MDB, which purported to terminate MDB's employment.
In June 2014, MDB served a notice of adjudication on Mr Horne claiming outstanding payment of £16,214 and denying that Mr Horne had grounds to terminate its employment. In defence, Mr Horne claimed that he was entitled to recover additional costs of approximately £28,500 from MDB, which were incurred as a result of having to complete MDB's works.
The adjudicator decided he had jurisdiction to decide whether Mr Horne had correctly terminated the contract and whether MDB was entitled to the outstanding payment claimed. However, he decided that he did not have jurisdiction to decide Mr Horne's entitlement to the net sum claimed for additional costs.
Consequently, the adjudicator found that MDB was not entitled to the monies it claimed and that it should pay the adjudicator's fees.
MDB refused to pay the adjudicator's fees so Mr Horne issued proceedings to recover those fees. In addition Mr Horne sought a declaration that the adjudicator had jurisdiction to decide Mr Horne's entitlement to the additional costs he claimed and to order MDB to pay £27,164, this being the net sum the adjudicator considered due to Mr Horne if the adjudicator did have jurisdiction in this respect.
The Court rejected Mr Horne's application for declaratory relief for the following reasons:
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