The applicant raised four main reasons for setting aside the statutory demand. First, that the adjudicator could not determine his or her jurisdiction, as that was a matter for the court. Second, the Act stated that adjudication did not apply to construction contracts with a residential occupier (section 106). Third, the original contract was superseded by a later contract contained in the exchange of letters, which did not contain a contract of adjudication clause. Finally, the use of a statutory demand was an abuse of process, as it was settled law that the appropriate way to enforce a decision was by way of court proceedings. Therefore, Dr Bowles should have taken that further step before issuing a statutory demand.
Ms Derrens held that while the construction contract was in respect of a residence, the parties had agreed in the contract to resolve their dispute by way of adjudication. In respect of jurisdiction, the adjudicator had determined that issue and it was not for the bankruptcy court to look behind that decision. More importantly, the judge noted that the applicant could have applied to the court to set aside the adjudicator’s decision or seek a declaration in respect of the point on jurisdiction. She noted that the applicant had taken no steps to adopt that course of action. Ms Derrens therefore concluded that the adjudicator’s decision was a debt that was sufficient to form the basis of a statutory demand.
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This is an interesting case because Dr Bowles used a statutory demand to enforce the adjudicator’s decision, and attempts by Mohammed to set it aside were refused. The registrar, Ms Derrens, decided that the nature of that debt was the binding contractual obligation on Mohammed to pay the sum quantified by the adjudicator’s decision, unless and until varied by arbitrational legal proceedings. She did not accept that the debt was disputed on substantial grounds, or any other kind. As a result she dismissed the application to set aside the statutory demand, ordered Mohammed to pay Dr Bowles’ costs and confirmed that Dr Bowles may petition the Court forthwith.