Lathom Construction Ltd -v- (1) Brian Cross (2) Anne Cross

The defendants would have had a reasonable prospect of success in contending at any trial that the adjudicator's decision that the defendants should pay specified sums to the claimant due to it under the compromise agreement was made without jurisdiction
 
A dispute involving various claims and counter claims was referred to adjudication and an adjudicator was appointed. A written compromise was arrived that. There followed a degree of uncertainty and an interim certificate was issued. The defendants withheld a sum of money in respect of VAT on the ground that the claimant, in breach of the compromise, had failed to carry out certain works. The claimant made representations to the adjudicator to the effect that the terms of the compromise did not apply and that it was applying for payment under the contract. The defendants contended that the compromise did apply with the result that the adjudicator did not have jurisdiction to determine the matters which the claimant wished to have decided. The adjudicator decided that there was in fact a compromise and that the defendants were incorrect in their assertion that they were entitled to withhold the sum in respect of VAT and should therefore pay the sum in respect of VAT and another sum. The claimant issued court enforcement proceedings and applied for summary judgment in respect of the amount of the adjudicator's award. The defendants submitted that the adjudicator rightly held that there was a compromise agreement but wrongly went on to consider the terms of the agreement and whether the defendant had complied with them because he had no jurisdiction to do so. Judge Mackay agreed with the defendants? submissions. He held that the defendants would have had a reasonable prospect of success in contending at any trial that the adjudicator's decision that the defendants should pay specified sums (including costs) to the claimant due to it under the compromise agreement which the defendant had failed to pay was made without jurisdiction with the result that the claimant's application for summary judgment in respect of those sums failed. Advice Note A dispute arising out of a compromise agreement in respect of a construction contract is not itself a dispute arising, in the words of section 108 of the Construction Act 1996, ?under? the contract. Therefore an adjudicator does not have jurisdiction if his decision is based on his findings as to such an agreement.
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