Fastrack Contractors Ltd v Morrison Construction Ltd & Anor

Factual and Procedural Background

The Plaintiff ("Fastrack") was engaged as a brickwork subcontractor by the Defendant ("Morrison"), a joint venture acting as main contractors for the construction of a Leisure World and Arena complex in Coventry. The subcontract, dated 26 August 1988, incorporated Morrison's standard terms and amendments, and set a subcontract period of approximately 20 weeks starting 8 August 1998. Disputes arose over delays and progress, with Fastrack alleging delays caused by Morrison and Morrison alleging poor performance by Fastrack.

Morrison issued a programme extending Fastrack's work completion to the end of March 1999, which Fastrack disputed. Fastrack applied for extensions and payments, while Morrison issued notices threatening to omit parts of Fastrack's work and engaged third parties to complete some work. Fastrack responded by treating Morrison’s actions as repudiation of the subcontract and withdrew from the site.

Two adjudications followed regarding payment disputes. The first adjudication awarded Fastrack a sum which was paid. The second adjudication, dated 1 July 1999 and conducted by adjudicator Mr D.S. Simons, awarded Fastrack a further sum of £120,601.68, of which £85,401.98 remained unpaid. Fastrack, now in liquidation, seeks summary judgment to enforce this second adjudicator's decision. Morrison contests the adjudicator’s jurisdiction, arguing no valid dispute existed at the time of referral.

Legal Issues Presented

1. Whether the adjudicator had jurisdiction to determine the dispute referred by Fastrack under section 108 of the Housing Grants, Construction and Regeneration Act 1996 ("HGCRA") and the Scheme for Construction Contracts (England and Wales) Regulations 1998.
2. Whether the dispute referred to adjudication was the same as or materially different from the pre-existing dispute between the parties.
3. Whether the adjudicator could validly determine his own jurisdiction in the face of Morrison’s challenge.
4. Whether the adjudicator’s decision awarding sums to Fastrack is enforceable despite Morrison’s jurisdictional objections.

Arguments of the Parties

Defendant's Arguments

• The only dispute existing at the time of the notice of adjudication concerned interim payment application no. 13, and the sums claimed in the adjudication materially differed from those in that application.
• Because the sums and claims differed, there was no valid dispute that had ripened into adjudication, meaning the adjudicator lacked jurisdiction.
• The adjudicator could not validly decide his own jurisdiction.
• The claim for damages for repudiation was misconceived as Morrison had not repudiated the subcontract.
• The sums claimed were excessive, inaccurate, and irrecoverable.
• The adjudication process should be adjourned pending resolution of jurisdictional issues or the court should decline enforcement of the adjudicator's decision.

Plaintiff's Arguments

• Morrison must demonstrate that the matters referred to adjudication were not previously in dispute.
• The test for jurisdiction is whether the matters referred were materially different from the pre-existing dispute; a claim that is a new head or presented wholly differently would fail this test.
• The adjudicator correctly decided he had jurisdiction and that decision is binding and not open to challenge in enforcement proceedings.
• The notice of adjudication and referral notice properly encompassed the pre-existing disputes, including repudiation, damages, and entitlement to payment.
• The adjudicator was entitled to take the initiative in ascertaining facts and law and to determine his own jurisdiction.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully analysed the statutory framework under section 108 of the HGCRA and the Scheme for Construction Contracts. It emphasized that an adjudicator's jurisdiction depends on the existence of a pre-existing "dispute" at the time of referral, which must be a single dispute rather than multiple disputes combined. The court rejected the Defendant's argument that the adjudicator lacked jurisdiction due to differences in sums claimed, explaining that a dispute may concern the quantum of sums due rather than a fixed amount.

The court noted that the adjudicator properly construed the notice of adjudication and referral notice against the factual background. The adjudicator found that the disputes referred were materially the same as those previously notified and rejected by the Defendant, including repudiation and damages claims. The adjudicator was entitled to determine his own jurisdiction pursuant to the Scheme and did so fairly, confining his decision to matters previously in dispute.

The court also explained that jurisdictional challenges can be resolved in various ways, including by the adjudicator or by the court during enforcement. Since the adjudicator had jurisdiction to decide the dispute referred, his decision was valid and enforceable. The court rejected the Defendant's contention that the adjudicator could not determine his own jurisdiction.

The court concluded that the adjudicator's decision awarding sums to the Plaintiff was within jurisdiction, based on the nature of the dispute referred and the statutory scheme governing adjudication.

Holding and Implications

The court granted summary judgment in favour of the Plaintiff for £85,401.98 plus interest from 1 July 1999 until payment at a rate of 1% above the Plaintiff’s bank minimum lending rate.

The decision enforces the adjudicator’s second decision and confirms the validity of the adjudication process under the HGCRA and Scheme where the dispute referred is materially the same as the pre-existing dispute. No new legal precedent was established; the ruling applies the existing statutory framework and case law to uphold the adjudicator’s jurisdiction and the enforceability of his award. The parties were directed to submit written submissions on costs within specified timeframes.