Allied P & L Limited v Paradigm Housing Group Limited [2009] EWHC 2890 (TCC)

United Kingdom

Judgment Date: 17.11.09

In this case the Court held that an adjudicator had no jurisdiction to decide that part of a dispute which had not crystallised as at the date of the notice of adjudication. The Court held that such matters were not consequential upon and incidental to the claims which had been asserted and the fact that it must have been obvious that there would be a dispute about such matters was insufficient to enable the claimant to assert that there was a dispute. But the Court nevertheless enforced the adjudicator’s award because the respondent had not made an effective reservation of its position in relation to the jurisdictional challenge that it was now seeking to make.

Technology and Construction Court, Mr Justice Akenhead


Allied P& L Ltd (“Allied”) was a contractor employed by Paradigm Housing Group Ltd (“Paradigm”) to build a number of dwellings. Clause 10.1 of the contract stipulated that if Allied failed to undertake certain of its contractual obligations then Paradigm was entitled to give notice to Allied specifying the default. If Allied remained in default then Paradigm could serve a second notice and determine the employment of Allied under the contract. The contract contained an adjudication clause. The works were delayed and Paradigm issued a withholding notice in relation to one of Allied’s applications for interim payment (“Interim Payment No. 15”). Paradigm subsequently served notice on Allied pursuant to Clause 10.1 (“the First Notice”), setting out seven complaints that were effectively the same as the complaints previously set out in the withholding notice. Allied’s solicitors then wrote to Paradigm denying that their client was in breach of the contract or that Paradigm were entitled to terminate it and they claimed payment under Interim Payment No. 15. Paradigm’s solicitors subsequently served a Notice of Determination on Allied (“the Second Notice”). Allied was ejected from site on the same day. Allied served a Notice of Adjudication on Paradigm, which alleged that Allied had been ejected from site two hours before the Second Notice was received and therefore that the contract was wrongfully determined. Allied sought payment for the works and variations that it had carried out and not been paid for plus damages arising as a consequence of Paradigm’s alleged repudiatory breach of contract. Paradigm responded by letter, which stated “we have not had a letter of claim from your client, and therefore issuing Notice of Adjudication is premature”. In its Response Paradigm alleged that the losses allegedly suffered by Allied had not crystallised and that it never received a Letter before Referral setting out the matters raised in the adjudication by Allied. The adjudicator made an award in which he found that Paradigm had no valid grounds for determining Allied’s employment under the contract and that Paradigm had therefore repudiated the contract. He found that Allied were entitled to be paid the sum of approximately £275k which included Interim Payment No. 15, a sum representing the value of work executed up to the date of repudiation, damages and loss of profit. Allied sought enforcement of the award.


The issues were:

  • whether or not a dispute had arisen in relation to all or part of what Allied had referred to adjudication (if no dispute had arisen then the adjudicator would not have had jurisdiction and his award would not have been enforceable);
  • if a dispute had arisen as to part only of what Allied had referred to adjudication, whether that part of the decision over which the adjudicator had jurisdiction was separately enforceable; and
  • whether Paradigm had in any event acceded to the jurisdiction of the adjudicator and had made no effective reservation in relation to his jurisdiction.


The Court found:

  • One must analyse what if any dispute has been referred at the time that the procedure to refer, laid down in the contract or by statute, is initiated.
  • The following principles have been established by the authorities: To enable a dispute or difference to arise, there must be a claim, an assertion or adoption of a position by one party which is expressly or by implication rejected or at least not accepted by the other (see e.g. Balfour Beatty Engineering Services (HY) Ltd v Shepherd Construction Ltd [2009] EWHC 2218 (TCC)). The claim, assertion, rejection or non-acceptance does not need to be in writing or to be in any form or necessarily be detailed. The claim, assertion or adoption of the position must be communicated to the other party. It cannot be enough to create a dispute that one party simply believes in its own mind (without any communication to the other) that if it was to make a claim it would in all probability be rejected by the other party. One needs to look at the history and the context in which the dispute is said to have arisen but the law adopts an inclusive interpretation as to what amounts to a dispute (see Amec Civil Engineering Ltd v The Secretary of State for Transport [2005] BLR 227 and Bovis Lend Lease Ltd v The Trustees of the London Clinic [2009] EWHC 64 (TCC)). The Court should not adopt an over legalistic analysis of what the dispute between the parties are; instead it will determine in broad terms what the disputed claim, assertion or position is (see Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC)). If a basic claim, assertion or position has been put forward by one party and the other disputes it, the dispute referred to adjudication will or may include claims for relief which are consequential upon and incidental to it and which enable the dispute effectively to be resolved. Thus, even if the claim did not as such seek a declaration or discretionary interest or costs, it may be so connected with and ancillary to the referred dispute as properly to be considered as part of it. There must be limits to this which can be determined by analysing what the essential dispute referred is. Where the dispute resolution clause refers to a dispute or “difference”, the term “difference” is less hard edged than "dispute”: see Amec Civil Engineering Ltd v The Secretary of State for Transport, above.
  • It is necessary for a party challenging the jurisdiction of the adjudicator to reserve its position in relation to its challenge. If it does not reserve its position effectively, generally it cannot avoid enforcement on jurisdictional grounds.
  • There are numerous types of jurisdictional challenge and there can also be different types of reservation. However, if a specific reservation was made on one ground and it was established that the ground in question was an invalid jurisdictional objection, the party in question must be taken to have acceded to the jurisdiction only subject to the specific failed ground; in those circumstances, the parties will be taken to have submitted to the jurisdiction even if there are other good grounds which existed but were not mentioned.
  • If the adjudicator has jurisdiction as to part of what is referred to him but no jurisdiction over other parts, in certain circumstances the Court has the power to enforce that part over which he did have jurisdiction: see Cantillon Ltd v Urvasco Ltd [2008] EWHC 2218 (TCC).
  • On the facts of this case, the dispute which had crystallised by the time of the Notice of Adjudication was whether there were any breaches which justified the termination which was being threatened by the First Notice, and whether those breaches were continuing up to the Second Notice. It did not include any entitlement to money or damages. Allied claimed that it must have been obvious that there would be a claim for the outstanding value of unpaid work and for damages in the event of an unlawful termination. However, Allied had remained silent with regard to this issue at the time of termination. The mere fact that Paradigm may or must have known that there would be the usual financial consequences was insufficient to enable Allied to assert that there had been a dispute. The fact that the Notice of Adjudication purported to add on claims for the financial consequences of termination did not of itself give the adjudicator jurisdiction to deal with them.
  • As the adjudicator decided that there were no material breaches of contract justifying termination, that part of his decision was made within jurisdiction because there was a dispute about it which was at least part of what was referred to him. The adjudicator’s finding that the unlawful termination was repudiatory conduct was also within his jurisdiction because that finding was ancillary and incidental to the dispute which had crystallised.
  • However, on the facts, Paradigm had failed to make an effective reservation of its rights in relation to the jurisdiction of the adjudicator. There was no express reservation nor could it be inferred from the wording of the Response or the correspondence from Paradigm.
  • Accordingly, the decision of the adjudicator would be enforced.
  • Allied claimed almost £35,000 in fees as the costs of the enforcement. The Court took the view that this was excessive and assessed the costs payable by Paradigm to be £20,500.

For full judgment please click here