J Murphy & Sons Ltd v W Maher and Sons L

J Murphy & Sons Ltd v W Maher and Sons Ltd

Citation: [2016] EWHC 1148 (TCC)

Background Facts

Murphy was engaged by Balfour Beatty to carry out shaft and tunnel work at Trafford Park, Manchester.
Murphy subcontracted Maher in February 2014 to remove spoil and supply aggregate.
Maher submitted a final account application in September 2015 for ~£764,000, claiming a net balance due of ~£297,000.
On 11 November 2015, it was alleged that Maher and Murphy orally agreed a final account sum of £720,000, implying a payment of £253,169 outstanding.
Murphy initially acknowledged this agreement but later disputed it, valuing the work much lower at £483,000 and refusing further payment.
Maher served a Notice of Adjudication in April 2016 to recover the agreed sum.
Murphy challenged the adjudicator’s jurisdiction, arguing the dispute arose under a separate "settlement agreement" and not under the subcontract.

Decision:
- The court rejected Murphy’s jurisdiction challenge and ruled the dispute could properly be adjudicated.

Key findings:
- The adjudication clause in the subcontract covered disputes “arising under or in connection with” the subcontract, which is sufficiently broad.
- Even if there was a final account agreement, it arose directly in connection with the original subcontract.
- The alleged oral agreement was either a variation to the subcontract or at least a settlement of a claim arising under it, so it remained within adjudication scope.

Declaration:
- The court granted a declaration confirming that the adjudicator had jurisdiction to decide the dispute.

Outcome:
- Murphy’s Part 8 claim was dismissed.
- Murphy was ordered to pay Maher’s costs (£11,000).

Broad interpretation of adjudication clauses:
- Where contracts include words such as “in connection with,” adjudication jurisdiction extends beyond strict contractual terms to related agreements or settlements.

Settlement agreements and variations:
- An alleged final account or settlement agreement resolving claims under a contract is typically treated as arising “under” or “in connection with” that contract.
- Disputes about whether such agreements exist or are binding can still be referred to adjudication.

Commercial purpose of adjudication:
- The policy of the Construction Act 1996 (and similar to arbitration) supports an inclusive approach, enabling speedy resolution of cash flow disputes.
- Parties are assumed to want all disputes arising from their contractual relationship resolved in a single, consistent forum (adjudication).

No strict division between “under” and “in connection with”:
- The decision confirms the approach taken in Fiona Trust (arbitration context) should inform construction adjudication, avoiding artificial distinctions.

Practical approach to subcontract administration:
- Final account discussions, even if intended to close out a project, remain subject to adjudication if a dispute arises about their validity or effect.