ISG Retail Ltd v Castletech Construction Ltd

Factual and Procedural Background

This opinion concerns an application for summary judgment to enforce a decision made by an adjudicator on 4 March 2015. The adjudicator found that the Defendant, Company A, had provided nothing of value to the Plaintiff, Company B, resulting in a complete failure of consideration and breach of contract. Company A was ordered to repay an advance payment of £35,000 plus VAT made by Company B. Company B was not entitled to interest on the sum. Company A opposed the summary judgment application on the basis that the adjudicator lacked jurisdiction. The dispute arose from a contract under which Company B paid Company A in advance, but Company A allegedly failed to perform its contractual obligations.

Legal Issues Presented

1. Whether the adjudicator had jurisdiction to decide the dispute referred to him, including the power to award restitution for total failure of consideration.
2. Whether the claim for restitution falls within the scope of a dispute "arising under the contract" as required by the Scheme for Construction Contracts.
3. Whether the adjudicator could order repayment of the advance payment despite restitution being an equitable remedy distinct from damages.

Arguments of the Parties

Appellant's Arguments (Company A)

• The adjudicator lacked jurisdiction because the decision exceeded the scope of the dispute referred.
• The dispute was not properly a dispute arising under the contract.
• The claim for restitution is an equitable remedy and thus outside the adjudicator's jurisdiction.
• There was no total failure of consideration as Company A had undertaken substantial work.
• The Notice of Adjudication did not mention restitution, so the adjudicator could not have jurisdiction to decide on it.

Appellee's Arguments (Company B)

• The Notice of Adjudication clearly identified a dispute under the contract concerning total failure of consideration.
• The adjudicator had jurisdiction to decide whether there was a total failure of consideration and to order repayment.
• Restitution is an available remedy for breach of contract involving total failure of consideration and is properly within the adjudicator’s powers.
• The claim for repayment is distinct from damages but is an ordinary incident of a breach of contract claim.

Table of Precedents Cited

Court's Reasoning and Analysis

The court found that the Notice of Adjudication clearly identified a dispute under the contract concerning whether there had been a total failure of consideration. This dispute was denied by the Defendant, confirming that a dispute under the contract existed. Therefore, the adjudicator had jurisdiction to hear the dispute. The adjudicator was required to decide whether a total failure of consideration occurred and whether the Plaintiff was entitled to repayment, with or without interest. The adjudicator's decision to order repayment was within jurisdiction.

The court explained that restitution, although an equitable remedy distinct from damages, is an available remedy for breach of contract involving total failure of consideration. The adjudicator, once seized of a dispute arising under the contract, may award any remedy within his power to which the claimant is entitled, including restitution. The court rejected the Defendant's argument that restitutionary claims fall outside adjudication jurisdiction because they are equitable claims not made under contract. The court distinguished between the nature of the dispute (which governs adjudicator's jurisdiction) and the nature of the remedy (which may include restitution).

The court further noted that if no contract existed, the adjudicator would have no jurisdiction to award restitution because the dispute would not arise under a contract. However, in this case, a contract existed and the dispute was properly within the adjudicator’s jurisdiction.

Holding and Implications

The court GRANTED SUMMARY JUDGMENT in favour of the Plaintiff, Company B, enforcing the adjudicator’s decision that Company A must repay the advance payment of £35,000 plus VAT.

The direct effect is that Company A is ordered to repay the sum forthwith. The court did not find it necessary to address further authorities and indicated that costs would ordinarily follow the successful party. No new precedent was established beyond affirming that adjudicators have jurisdiction to award restitution as a remedy for breach of contract involving total failure of consideration within the scope of a dispute arising under the contract.