Construction Adjudication – are cross adjudications possible despite ISG v Seevic ?

Many of you attended our recent seminars for the Adjudication Society (Bristol on 5 July and Cardiff on 12 July). Those who did will have heard Andrew Kearney and Rebecca Taylor discussing whether the Seevic decision is correct, and suggesting that the TCC may be ready to depart from it.  If so, this could make it possible for an adjudication for the notified sum in an interim application for payment (in the absence of a payment or pay less notice) – a so called ‘smash and grab’ –  to be met by a cross adjudication to establish the true value of the work applied for – even on an interim application.  (This is already possible on a final payment dispute – Harding v Paice, CA).

In that context, the latest TCC decision is of some interest. Judgment was handed down on Wednesday 12 July, but sadly was reported too late to be included in our Cardiff seminar that evening. However, it perhaps lends further support to our predictions of the imminent demise of Seevic…..

In ICI v Merit Merrell Technology [2017] EWHC 1763 (TCC) Fraser J was dealing with the position following a repudiatory breach and considering possible legal routes to recovery of overpayment on interim applications.  Such an overpayment could of course arise wherever a notified sum has to be paid due to absence of notices and without determination of the true value of the work – as had happened in this case.  In that context it appeared to be argued that the last interim payment determined the value of the work at the date of repudiation such that there was no “accrued right” to repayment which could survive the repudiation.  Seevic was relied on in that context.
 
Mr Justice Fraser referred to the Court of Appeal decisions in Harding v Paice and Brown v Complete and said  
 
“In my judgment, the ratio of both those Court of Appeal authorities – though neither expressly finds that ISG v Seevic is wrong, because it was unnecessary for the differently constituted courts to do so – cast some real doubt on whether that case would be decided in the same way now. That must lead to similar doubts as to whether the reasoning in that case concerning rights to recover overpayments is correct….”
 
Where does this leave a paying party who has failed to give notices on an interim application ? 
 
Following a payee’s  ‘smash & grab’ (yes we know its pejorative and shouldn’t be used – but until someone comes up with a better shorthand label…..) will a second Adjudicator be willing to engage on a ‘value’ adjudication ?  Probably not – faced with Seevic, Adjudicator 2 will probably resign ?  But maybe, in a high enough value case worth running, on a Part 8 application the TCC will be willing to declare that a second adjudication on value is permissible, and essentially depart from ISG v Seevic …..   


Rebecca Taylor and Andrew Kearney are independently recommended specialists in Construction dispute resolution.  Both are accredited Adjudicators and Mediators, available for appointment in those roles, or to advise or act as party representatives, in any Construction dispute.

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