D G Williamson Ltd v Northern Ireland Prison Service

Factual and Procedural Background

This dispute arose from a contract between Company A and The State Prison Service for maintenance and minor building works, entered into around October 2001. The contract was a 'Daywork Term' contract, where the employer provided a budget and the contractor performed work on a cost-plus basis with a tendered percentage addition for overheads and profit. The contract expired on 31 December 2006, and there were communications regarding an extension to 31 March 2008, including proposals for revised cost rates due to inflation and other cost increases.

Subsequent to these communications, purchase orders and variation instructions were issued referencing the original contract's daywork terms and applicable rates. The Plaintiff issued a Notice of Adjudication based on the original contract, which the Defendants challenged on jurisdictional grounds. The matter proceeded to a hearing, during which issues of contract validity, jurisdiction of the adjudicator, and entitlement to set-off were contested.

Legal Issues Presented

1. Whether the adjudicator had jurisdiction to determine the dispute given that the Notice of Adjudication referred only to the original contract and not any extension beyond 31 December 2006.
2. Whether the contract constituted a "contract in writing" as required by the relevant 1997 statutory Order.
3. Whether enforcement of the adjudicator's award should be refused on the basis of the Defendants' entitlement to a set-off exceeding the amount claimed by the Plaintiff.
4. Whether a stay of enforcement should be granted pending arbitration of the set-off claim.

Arguments of the Parties

Defendants' Arguments

• The adjudicator lacked jurisdiction because the Notice of Adjudication only referred to the original contract and not any extended contract beyond 31 December 2006.
• The contract was not a "contract in writing" as required by the 1997 Order, thus falling outside its provisions.
• If jurisdiction existed and a valid award was made, enforcement should be refused due to the Defendants' entitlement to a set-off significantly exceeding the Plaintiff's claim.
• If no set-off entitlement existed, a stay of enforcement should be granted pending resolution of the set-off claim at arbitration, which was at an early stage and expected to take considerable time.

Plaintiff's Arguments

• The Notice of Adjudication properly invoked the original contract, which was sufficient to establish jurisdiction.
• The contract and related documentation constituted an agreement "in writing" under the statutory framework, sufficient to satisfy the requirements for adjudication.
• The set-off claim did not justify refusal of enforcement or a stay, as the adjudication process was intended to provide a speedy interim resolution pending final determination.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court examined the statutory requirements under the 1997 Order concerning what constitutes a "contract in writing." It analysed the categories set out in section 107, including agreements made in writing, by exchange of written communications, or evidenced in writing. The court emphasised the importance of certainty in adjudication due to the tight statutory timetable, requiring the adjudicator to be certain of the contract terms giving rise to the dispute.

The court considered whether the documentation and correspondence between the parties sufficiently evidenced the agreement in writing. It noted that while there was evidence supporting the existence of an agreement and its substance, it was debated whether this was enough to satisfy the statutory requirement that the entire agreement be in writing to confer jurisdiction on the adjudicator.

Regarding the jurisdictional issue related to the contract period, the court noted the Notice of Adjudication referred only to the original contract and not to any extended contract, calling into question the adjudicator's jurisdiction over sums claimed for works beyond the original contract term.

On the set-off claim, the court acknowledged Parliament's intention in the relevant legislation to provide a speedy, provisional dispute resolution mechanism through adjudication, with decisions binding until final resolution by arbitration or litigation. The court recognised that while adjudication is interim and expedient, it does not replace arbitration or litigation.

Concerning the request for a stay of enforcement pending arbitration of the set-off claim, the court held that such stays should be limited to cases where there is a risk of manifest injustice. Since there was no suggestion that the Plaintiff could not repay the sum if required, the court found no basis to grant a stay.

Holding and Implications

The court's final decision was to ENFORCE the adjudicator's award.

The direct effect of this decision is that the Plaintiff is entitled to judgment on the sum awarded by the adjudicator, including VAT, adjudicator's costs, and interest. The court declined to stay enforcement pending arbitration of the set-off claim, emphasizing that adjudication awards are to be complied with pending final dispute resolution. No new precedent was established, and the ruling reinforces the statutory framework prioritizing certainty and speed in construction dispute adjudication.