Crystal Electronics Ltd v Digital Mobile Spectrum Ltd [2023] EWHC 2656 (TCC)
In October 2023 HHJ Keyser KC refused to enforce two “smash and grab” adjudication decisions for a combined sum of approximately £750,000. A summary judgment application to enforce the first adjudicator's award had been rejected in August 2023, and there was an expedited trial to determine whether the works (which were the subject of the two decisions) were “construction operations” for the purposes of s.105 of the Construction Act.
Question for determination by the Court
The defendant was a joint venture of four UK mobile network operators brought together to perform remedial works to address the adverse impact 4G mobile broadband was having on digital TV reception. The defendant had contracted the claimant to provide corrective support to households whose TV reception had been affected.
The defendant terminated the contract. Following termination, the claimant submitted two invoices for payment that were not paid and accordingly the claimant started a “smash and grab” adjudication.The adjudicator failed to address the defendant's jurisdictional challenge and awarded the claimant the full value of the invoices. The claimant brought a second adjudication for payment of the second outstanding invoice and the same adjudicator again awarded the full value.
The claimant commenced summary judgment proceedings to enforce the adjudicator's decision. The claimant claimed that its works were “construction operations” as defined under s.105 of the Act or “surveying work” or “advice on engineering” under s.104(2) of the Act. The defendant submitted that the only part of the work that could conceivably be construction operations was the fitting of television aerials, which did not satisfy the requirement in s.105 of the Act of “forming part of the land”.
Decision
Following Keyser J's analysis of the facts, it was held that a substantial proportion of the claimant's work was not on structures or works forming part of the land and therefore did not constitute 'construction operations' under the Act. The judge was not convinced by the claimant's submission that the telecommunications system (i.e. a TV aerial in this instance) had to be viewed as a whole and as permanently integrated into the structure of the house.
Accordingly, the court held that the claimant's works were not construction operations, and the adjudicator did not have jurisdiction to hear the dispute under the Construction Act. The adjudicator's decisions were unenforceable.
Commentary
While it is possible that novel works not previously argued before the court are capable of falling within the definition of construction operations, those works must form part of the land if they are to satisfy the requirements of the Construction Act.
The case provides a sobering reminder that if a proper assessment is not undertaken at the outset as to whether works constitute "construction operations" under the Construction Act, and there is no separate contractual right to adjudicate, a lot of time and money can be wasted pursuing an unenforceable adjudication decision.
Read the full judgement.
