Do you have a dispute? More than likely - yes

September 2008

The recent case of VGC Construction Limited v Jackson Civil Engineering Limited shows the courts are continuing to take a robust approach to the enforcement of decisions and parties should be aware of this when deciding their strategy for participating in adjudications.

VGC were employed as subcontractors by Jackson on the M3 motorway project.  The works overran, various applications for payments were made by VGC and Jackson imposed a number of set-offs and thus VGC commenced an adjudication.  The adjudicator decided there was a net sum of circa £745K due to VGC but Jackson refused to make payment and enforcement proceedings were commenced by VGC.

Jackson raised issues of jurisdiction in the enforcement proceedings as to whether the items claimed were sufficiently defined to be considered in dispute.  Jackson raised a particular objection to a single-line entry of "delay and disruption" for £300,000 in an application for payment.  They argued this was so ill-defined it was not capable of giving rise to a dispute.

The court considered Jackson's arguments through the cases of Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2006] and Amec Civil Engineering Ltd v The Secretary of State for Transport [2005].

Mr Justice Akenhead said that one needed to look at the surrounding circumstances to assess whether a claim was so nebulous and il-defined as to be incapable of giving rise to a dispute.  On examination of the facts Mr Akenhead found that the £300,000 was not nebulous and ill-defined because:

• The claim for £300,000 was one of 150 sub-claims;
• The claim for delay and disruption related in large part to the variation account and therefore the primary basis for the claim should have benn obvious;
• Some of the variations themselves identified factors which could give rise to delay and/or disruption;
• There were specific claims for "Site Prelims Over-run";
• It should have been obvious that the claim included other aspects of delay and disruption such as overheads and profit;
• It is not unusual for delay claims to be in an "on-account" format, this does not mean they cannot be addressed;
• It must have been obvious to Jackson that the delay claim related in part to the 26 weeks delay to completion.

Mr Justice Akenhead therefore concluded that there was the £300,000 claim was in dispute between the parties and the adjudicator had jurisdiction to decide it.  Accordingly, the proceedings for enforecement were upheld.

This case shows the importance of trying to address claims, no matter how vague they appear to be. It is not open to a defendant to rely on a technical jurisdictional defence of "no dispute" when in reality they have some knowledge and understanding of the issues behind the claim.

The full transcript of the case can be found here.

This article contains information on current legal issues but is for information purposes only.  It should not be relied upon or be construed as advice or applied to any particular set of facts.  If you have a particular issue please take professional advice.