This case is a helpful reminder to employers and sub-contractors as to the crystallisation of disputes. It also serves as cautionary tale to employers to be careful about communications with sub-contractors if the contractual situation has not been finalised.
Background
The Claimant was the sub-contractor and the Defendant was the main employer. The Claimant was originally employed by a party who subsequently went into insolvency. A draft contract was provided by the Defendant but not signed. The Claimant sent six invoices to the Defendant and various payment notices and two payless notices were issued. The Claimant proceeded to adjudication to claim £37,000.
The Defendant claimed that the adjudicator did not have jurisdiction because the dispute had not crystallised. This was on the basis that there was some confusion, on the part of the Claimant, as to the “correct contractual counterparty”. Not least as invoices were not always addressed correctly.
Crystallisation and Judgement
The Court provided a useful overview on the case law relating to whether or not a dispute had crystallised. The upshot being; that whether or not a dispute has crystallised boils down to the context of the case and actions of the parties.
In this case, the Defendant treated the invoices as having been issued. More importantly, the payless notices were signed “for and on behalf of Prosperity Moseley Street Limited (the Defendant)”.
Crucially, the payment notice was sent from the Defendant to the Claimant noting the date for payment. The Court noted that when a date for payment passed, there was clearly a dispute.
Given that there was clearly a dispute and therefore the adjudicator had jurisdiction to decide the matter, which therefore meant that the Court would seek to enforce the adjudicator’s Decision.
Implications
The decision demonstrates that the court will be looking at the parties’ actions and the context of the situation to decide whether a dispute has crystallised.
If there is such a situation where the main contractor falls away, for whatever reason, or if there is any confusion as to the contractual parties, advice should be sought before communications are sent if either party anticipates a dispute.
