REUTERS | Mike Blake

Crystallisation and severability of disputes: issues arising from Allied v Paradigm

Akenhead J’s judgment in Allied P&L Ltd v Paradigm Housing Group Ltd raises several interesting questions about adjudication enforcement. PLC Construction has discussed the case with Calum Lamont, counsel for Allied at the enforcement hearing, to identify some of these issues.

Following that discussion, here are PLC Construction’s thoughts on some key points.

Crystallisation of the dispute

The judgment deals with the crystallisation of a dispute that was referred to adjudication and, specifically, whether (on the facts) a dispute existed on quantum and liability, or just liability. The proceedings concerned an adjudication brought by Allied after its ejection from site.

The judge found that there was a dispute in existence as to liability (that is, the legitimacy of the grounds upon which Allied was ejected from site). However, Allied had not put forward a money claim arising from its unlawful ejection until in the adjudication itself. Allied argued that it was obvious that there would be financial consequences from Paradigm’s unlawful termination of the contract.

The court rejected this argument, giving rise to an important point, namely while the link between liability and quantum may seem clear to you, if you want to refer a money claim, you need to inform the other side of the money claim before adjudicating.

The other important lesson to be learnt is that, if a party takes a specific jurisdictional challenge in an adjudication, it is likely that the court will frown upon (and disallow) jurisdictional challenges raised at a later date that could (and should) have been taken before. The court may well have refused to enforce if Paradigm had stated that it considered that no dispute had crystallised at the outset, before both parties had spent considerable sums in the adjudication.

Severability

This judgment follows a line of previous cases in which Akenhead J has discussed the severability of an adjudicator’s decision. Although the court’s comments in this case were obiter, it seems clear from the judgment that the court would have severed the decision if necessary.

In the course of its judgment, the court mentioned that there may be cases where it is appropriate to sever an adjudicator’s decision but the adjudicator’s award on costs is “un-severable and therefore unenforceable in practice” (paragraph 35, judgment). At the moment, most adjudicators’ decisions on who pays their costs are set out briefly, making them difficult to sever.

In light of this judgment, should adjudicators start making issues based costs awards as a matter of course?

The judgment provides no guidance on this point, but Matt Molloy has written a blog post on this very issue. He wonders whether he should at least consider it. This may be sensible, but arguably an adjudicator should not be expected to spend precious time detailing his costs award, especially as it pre-supposes that he has no jurisdiction.

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