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Decided
Cases Concerning Adjudication
The
Highland Council -v- The Construction Centre Group Limited
(5 August 2003)
[Case Summary to follow]
Abbey Developments Limited -v- PP Brickwork Limited
(4 July 2003)
[Case Summary to follow]
Lovell Projects Limited -v- Legg and Carver (July 2003)
The Defendants argued that they were not bound by the
adjudication provisions in the contract by reason of
the Unfair Terms in Consumer Contracts Regulations 1999
made pursuant to the European Communities Act 1972,
further that they could set off against the Decision.
HHJ Mosley QC considered the judgment in Picardi -v-
Cuniberti and held that it had no application to this
case where the form of contract was insisted on by the
Defendants, who had available both advice from solicitors
and from their nominated contract administrator.
The Judge also decided that the parties had agreed by
the contract that a set off would only be permitted
when a withholding notice had been served. The principle
in Bovis -v- Triangle that:
"the decision of an adjudicator that money must
be paid gives rise to a second contractual obligation
on the paying party to comply with that decision within
the stipulated period. This obligation will usually
preclude the paying party from making withholdings,
deductions, set offs or cross claims against that sum"
applied to this contract to the same extent as it applies
to contracts falling within the ambit of the HGCRA.
Hurst Stores and Interiors Limited -v- M. L. Europe
Property Limited (25 June 2003)
This was one of those rare cases
where the matter proceeded to court following an adjudication
and where the Court overturned the adjudicator's findings.
There was a dispute over the Hurst accounts. The Adjudicator
had held that the Hurst account was of a binding nature
and that no further claims could be made for events
which occurred up to the date of the account. This effectively
barred Hurst's final account in the sum of some £2.5m.
Hurst said that the documents should not be binding
for two reasons. First, the project manager did not
have authority to enter into such an agreement and second,
the document was entered into on the basis of a unilateral
mistake on the part of the project manager and the documents
should be rectified so as to remove reference to full
and final settlement of claims. Mr Recorder Reese QC
agreed and so ML could not be allowed to place reliance
on the documents which therefore did not have any binding
effect in respect of the claims for delay and disruption
that Hurst intended to make.
RSL
(South West) Limited -v- Stansell Limited
(16 June 2003)
[Case Summary and Judgment to follow]
Shimizu Europe Limited -v- LBJ Fabrications Limited
(22 May 2003)
This adjudication took place under
the TeCSA rules. It was held that:
1. The parties had agreed the position as to the contractual
relationship between them, namely that their agreement
was based on a Letter of Intent. The contractual relationship
was not in issue and the adjudicator did not have jurisdiction
to matters of contract formation (as he did).
2. Even if that were not the case, the adjudicator should
have made clear to the parties that, although they agreed
that they had contracted on the basis of a Letter of
Intent, he was intending to decide whether or not that
was so, and should have given the parties the opportunity
to make submissions on the question of contract formation
(as opposed simply to the operation or otherwise of
the cap on expenditure imposed by that Letter of Intent).
By not doing so, the adjudicator acted in breach of
the rules of natural justice with the consequence that
the court would be slow to give summary judgment to
enforce the decision.
3. The TeCSA rules do not operate to oust the jurisdiction
of the court to construe an adjudicator's decision and
to grant declarations in that regard including (in this
case) that the Decision permitted a subsequent withholding
to be made.
Orange EBS Limited -v- ABB Limited (22 May 2003)
[Case Summary and Judgment to follow]
City Inn Limited -v- Shepherd Construction Limited (20
May 2003)
[Case Summary and Judgment to follow]
Galliford Northern Limited -v- Markel UK Limited
(12 May 2003)
[Case Summary and Judgment to follow]
Comsite Projects Limited -v -Andritz AG
(30 April 2003)
[Case Summary and Judgment to follow]
The Construction Centre Group Limited -v- The Highland
Council (11 April 2003)
[Case Summary and Judgment to follow]
Deko Scotland Limited -v- Edinburgh Royal Joint Venture
et al (11 April 2003)
[Case Summary and Judgment to follow]
Hills Electrical & Mechanical PLC -v- Dawn Construction
Limited (7 April 2003)
[Case Summary and Judgment to follow]
Trustees of the Harbour of Peterhead -v- Lilley Construction
Limited (1 April 2003)
[Case Summary and Judgment to follow]
Beck Peppiat Limited -v- Norwest Holst Construction
Limited (20 March 2003)
[Case Summary and Judgment to follow]
St Andrews Bay Development Limited -v- HBG Management
Limited (20 March 2003)
The Adjudicator here, who was named as second respondent,
was required to make a decision by 7 February 2003.
Various extensions were granted to the Adjudicator which
left the decision date at 5 March 2003. On 5 March a
secretary employed by the Adjudicator's firm informed
HBG's solicitors that the Adjudicator had reached a
decision but did not intend to release it until her
fee had been paid. By a fax sent the following day,
HBG indicated its intention to pay the whole of the
fee in order to secure the release of the decision.
The decision was then released on 7 March 2003 and the
reasons for that decision communicated to the parties
on 10 March 2003. At no time did HBG seek an extension
of time required to produce a decision beyond 5 March
2003. St Andrews claimed that the Adjudicator had no
power to reach her decision after 5 March 2003. Therefore
the decision sent to the parties on 7 March 2003 was
not a valid decision.
Lord Wheatley concluded that a decision cannot be said
to be made until it has been actually provided to the
parties. Further, in the circumstances of this case,
the Adjudicator was not entitled to delay communication
or intimation of the decision until the fees were paid.
There was nothing in the Scheme or contract to allow
this. No alternative arrangement had been made. However,
the Judge held that the failure of the Adjudicator to
produce the decision within the time limits whilst serious
was not of sufficient significance to render the decision
a nullity. It was not such a fundamental error or impropriety
to render the entire decision invalid.
R. Durtnell & Sons Limited -v- Kaduna Limited
(19 March 2003)
[Case Summary and Judgment to follow]
Harvey Shopfitters Limited -v- ADI Limited
(6 March 2003)
[Case Summary and Judgment to follow]
Vaughan Engineering Limited -v- Hinkins & Frewin
Limited (3 March 2003)
[Case Summary to follow]
Pegram Shopfitters Limited -v- Tally Wiejl (UK) Limited
(14 February 2003)
Tally declined to pay the sum of £95,483.78 plus
interest and the adjudicator's fees arguing that there
was no construction contract between the parties or
if there was a contract, that the contract was different
in content to the contract found to exist by the adjudicator.
Pegram claimed that it was one based on its own conditions
of sale whilst Tally claimed that it was one based on
the JCT Prime Cost Standard Form of Contract 1998. There
were no adjudication provisions in the Pegram standard
terms thus on its case, the Scheme would apply.
Here, HHJ Thornton QC found that the parties had entered
into a construction contract in such a way that its
terms were not clearly and unquestionably capable of
being identified. The reason was that the negotiations
consisted of a series of offers and counter offers.
No complete set of contract documentation was identified.
Therefore, the parties had not produced a construction
contract whose terms enabled either party to give notice
at any time of the intention to refer a dispute to adjudication.
As the mandatory requirements for section 108 of the
HGCRA had not been complied with, the Scheme applied.
Therefore, the Adjudicator had been correctly appointed
and had correctly applied the Scheme.
Dumarc Building Services Limited -v- Mr. Salvador Rico
(31 January 2003)
[Full Judgment to follow]
Try Construction Limited -v- Eton Town House Group Limited
(28 January 2003)
[Case
Summary and Judgment to follow]
Costain Limited -v- Wescol Steel Limited
(24 January 2003)
[Case Summary and Judgment to follow]
Levolux A.T. Limited -v- Ferson Contractors Limited
(CA) (22 January 2003)
This was a Court of Appeal case.
The key issue was whether, pending final resolution
by arbitration or litigation, an adjudicator's decision
should be enforced notwithstanding that it might conflict
with the contractual rights of the parties. In other
words, could a "paying party" use, for example,
determination provisions to get round an adjudication
decision. Thus the case has certain similarities with
the Bovis v Triangle case.
Here, clause 29. 8 of the contract provided that if
the contractor shall determine the sub-contract for
any reason mentioned in clause 29.6 then all sums of
money that may then be due or accruing due from the
contractor to the sub-contractor shall cease to be due
or accrue. Whilst clause 29.9 provided that until after
completion of the sub-contract works and the making
good of defects, the contractor shall not be bound by
any provisions of the sub-contract to make any further
payment to the sub-contractor. Ferson claimed that the
terms of the contract overrode the obligation to make
payment in accordance with the adjudicator's decision.
The Court of Appeal emphatically disagreed with this
proposition and, agreeing with HHJ Wilcox, dismissed
the appeal. LJ Mantell said:
"But to my mind the answer to this appeal is the
straight forward one provided by Judge Wilcox. The intended
purpose of s. 108 is plain...The contract must be construed
so as to give effect to the intention of Parliament
rather than to defeat it."
Joinery Plus Limited (in administration)
-v- Laing Limited (15 January 2003)
HHJ Thornton QC held that the decision
had the appearance of having been decided by reference
to the wrong conditions of contract and without recourse
to the correct contractual documentation. Thus the errors
were fundamental and not capable of being corrected
under any implied power to correct. The question referred
was not answered. The decision was a nullity.
The Judge also considered the extent to which regard
may be had to an Adjudicator's reasons. If an adjudicator
gives any reasons, they are to be read with the decision
and may be used for the means of construing and understanding
the decision. The Adjudicator had also expressed views
in a post decision letter about his decision. The Judge
said that strictly these views were irrelevant but they
did provide some limited guidance in determining whether
any error made by the Adjudicator was substantial so
as to effect the validity of his decision.
Laing claimed that JPL had accepted the Adjudicator's
decision by accepting payment from Laing of the amount
awarded by the Adjudicator. The Judge disagreed. JPL
challenged the decision before it received the cheque
and informed Laing that it was only accepting the cheque
generally on account of Laing's obligations under the
subcontract since the Adjudicator had failed to answer
the question referred to him. Accordingly, JPL could
start a fresh adjudication based on the same dispute
originally referred.
Finally, the Judge considered the relevance of JPL's
administration. The Judge did not agree that JPL should
repay the monies it had received as a condition of taking
further action. JPL had a set off and equitable cross
claim in the same amount, which was reasonable to allow
as a means of defeating the Laing claim. In particular,
Laing had already conceded that some money was due to
JPL and the Adjudicator, in the abortive adjudication
proceedings, had also formed the view that a balance
was due.
Hart Builders (Edinburgh) Limited -v- St Andrew Limited
(10 January 2003)
[Case
Summary and Judgment to follow]
Jamil Mohammed -v- Dr. Michael Bowles (2002)
Mohammed contracted to carry out
works to Dr Bowles' residence. Disputes arose and Dr
Bowles instigated successful adjudication proceedings
under Article 6 of the JCT Minor Works contract. Mohammed
refused to pay and Dr Bowles served a statutory demand.
Mohammed sought to set the statutory demand aside.
One of the key questions before the court was whether
the adjudicator's decision created a debt that could
form the basis of the statutory demand, and if so what
was the nature of that debt. The Registrar held that,
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 Registrar
noted that although the applicant could have applied
to set aside the adjudicator's decision or sought a
declaration on jurisdiction, he had not. Therefore the
adjudicator's decision was a debt that was sufficient
to form the basis of a statutory demand. 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 arbitration or
legal proceedings. It was not disputed on substantial
grounds.
As a result the application was dismissed with costs.
Picardi
(t/a Picardi Architects) v Cuniberti & Anor
(19 December 2002)
HHJ Toulmin CMG QC had to consider a fee claim made
by the Claimant Architects against the Defendants following
the refurbishment of their private dwelling house in
London. Picardi had an Adjudicator's decision in their
favour.
Picardi claimed that the contract between the parties
incorporated the RIBA Conditions of Engagement and the
model adjudication procedure published by the CIC. The
Judge found that no such agreement was made. Therefore,
the Adjudication was invalid.
The Judge also separately considered whether Picardi
should have drawn the Cuniberti's attention to specific
clauses of the RIBA conditions as required under the
RIBA Notes of Guidance. He commented that - particularly
because Parliament had specifically excluded private
dwelling houses from the adjudication legislation -
a provision including adjudication as part of a contract,
was an unusual provision which therefore ought to be
brought to the specific attention of a lay party if
it is later to be validly invoked.
A -v- B (17 December 2002)
In this Scottish case (the company
names were not given), Lord Young had to consider an
application by A to enforce an adjudicator's decision,
awarding them loss and expense totalling £639,151.82.
B argued that the contract prohibited A from raising
any action to enforce the award until either termination
of the present sub-contract or actual completion of
the last phase of the main contract. Appendix 8 of the
subcontract stated that no party shall, save in the
case of bad faith, make any application whatsoever to
a court in relation to the conduct of the adjudication
and the decision of the adjudicator until completion
of the contract or termination of the sub-contract.
A argued that this clause was not concerned with challenges
to the decision by way of judicial review but enforcement.
The Judge, in a decision very much in line with the
thinking of the CA in Levolux, agreed. An adjudicator's
decision when pronounced is legally binding on the parties.
Since an obligation arising out of a decision is binding,
it must be capable of enforcement. The clause in the
contract related only to judicial review of a decision
- not to proceedings to enforce that decision.
Alternatively, B relied on the fact that the adjudicator
had awarded an extension of time of only 46 weeks, when
112 weeks was sought. Consequently, B maintained that
A was in delay for a period of 66 weeks, which would
attract LADs at a rate of £75K per week. In relation
to this second argument, Lord Young noted that B did
not, during the adjudication, assert that they were
entitled to LADs if the Adjudicator failed to award
A the full extension of time sought. B merely contested
the EoT claim, admittedly with some success. However,
making a claim for LADs is different to challenging
a claim for an extension of time. Different questions
arise, for example, is the sum claimed as LADs a penalty?
Therefore, this argument failed.
Ballast plc -v- The Burrell Company (Construction Management)
Limited (17 December 2002)
Lord Johnston gave Judgment in the
Scottish Court of Appeal in an appeal brought by Ballast
Plc.
The original complaint was that the Adjudicator's decision
did not determine the dispute as originally referred
and identified in the Notice. As a consequence the decision
was a nullity. Lord Johnston affirmed the original decision
of Lord Reed and in doing so stressed the importance
for adjudicators of answering the question actually
put in the Notice of Adjudication. He noted that:-
" As regards jurisdiction...it is our opinion that
the Adjudicator, while restricted to issues focussed
in the dispute, has nevertheless both the power and
duty to determine whether or not a claim that it put
forward in respect of valuation of work done is validly
asserted under the contract. He must answer that question
either in the affirmative or the negative. He cannot
decline to address it, which is what the Adjudicator
in fact did in this case. [The power of the Adjudicator]
is based on the notice of the dispute which identified
the question which the Adjudicator had to address. Thereafter,
it was his duty in addressing that question to consider
the validity of each and all of the claims put forward,
which in turn would require him to consider the basis
upon which they were being asserted. If not contractually
based, they must inevitably fail - either in whole or
in part."
Here the adjudicator had considered that his powers
were limited to considering the strict contractual terms
between the parties. Therefore by limiting himself thus,
he had not considered the reality of the situation between
the parties and in doing so had failed to consider the
"whole dispute" which had been referred to
him.
Baldwins Industrial Services plc -v- Barr Limited
(6 December 2002)
A contract for the supply of a mobile crane plus driver
was a contract for construction operations. The provision
of the driver made the significant difference. Although
the contract did not make any direct reference to the
work to be carried out, taken together the crane and
driver were to be used for building operations. This
specific point is unlikely to crop up again since the
latest version of the CPA Model Conditions, in effect
from July 2001, includes an express provision that the
Scheme for Construction Contracts applies.
Although Judgement was given in favour of Baldwins,
Her Honour Judge Kirkham followed the principles laid
down in the cases of Herschel Engineering v Breen Property
and Rainford House v Cadogan, in deciding to grant a
stay of execution. Where there is a potential counterclaim
and the strong possibility that a claimant will be unable
to repay any monies which are found to be have been
wrongly paid over, then discretion will be exercised
in favour of granting a stay. Here Barr were required
to pay the adjudicator's award into court and commence
proceedings within one month failing which the money
was to be paid out to Baldwins. The stay of execution
did not apply to the costs and fees of the adjudication.
Skanska Construction UK Limited -v-
The ERDC Group Limited & anr (28 November 2002)
Skanska sought to have an adjudication suspended by
challenging the adjudicator's jurisdiction to hear the
dispute. The adjudication was the second adjudication
brought by ERDC against Skanska, who claimed it centred
on a dispute, which was "the same or substantially
the same" as the first dispute. Accordingly, Skanska
said that it could not be adjudicated and invited the
adjudicator to step down. He refused.
The first adjudication had arisen from a dispute over
an interim application, whilst the second arose following
ERDC's final account submission. Skanska argued that
in essence both disputes concerned the quantification
of the loss and expense element of ERDC's claim. ERDC
argued that it was quite different to the interim valuation
dispute, albeit that it did concern similar claims and
sums. Since the first adjudication, significant further
information and supporting documentation had both come
to light and been exchanged. Further the second adjudication
centred on different sub-contract clauses and so would
proceed upon a different basis.
Both the second adjudicator (deciding his own jurisdiction)
and the judge hearing the petition agreed with ERDC's
arguments. Lady Paton, agreeing with the Sherwood decision,
refused Skanska's petition stating, that in the second
adjudication "a different stage in the contract
has been reached; different contractual provisions apply;
considerably more information may be available by the
date of issue of the final account; and different considerations
and perspectives may apply." Thus the fundamental
nature of the dispute would be fundamentally different.
Skanska also raised a side argument that the sub-contract
had required that documentary evidence and details of
any loss and expense be provided within 6 months of
Practical Completion date and as such ERDC had been
out of time in supplying this information. Lady Paton
again agreed with ERDC and held that for such a stringent
time bar to apply, the sub-contract would have had to
be expressed in clear and unambiguous language. Here,
the sub-contract only set out a timetable. In any event,
Skanska's conduct during the first adjudication had
been such as to have waived any right to maintain the
time bar argument.
Cowlin Construction Limited -v- CFW
Architects
(15 November 2002)
[Case Summary to follow]
Bovis Lend Lease Limited -v- Triangle Development Limited
(2 November 2002)
In this case, HHJ Thornton QC had to consider whether
a party could withhold against a sum directed to be
paid by an adjudicator following three adjudications
between the parties. The Judge concluded by setting
out a number of factors that must be in place before
such a withholding can be made:
· The decision of an adjudicator that money must
be paid gives rise to a separate contractual obligation.
The paying party must comply with that decision within
the stipulated period. Usually the paying party cannot
withhold, make a deduction, set-off or cross-claim against
that sum.
· To withhold against an adjudicator's decision,
an effective notice to withhold payment must usually
have been given prior to the adjudication notice being
given and been ruled upon and made part of the subject
matter of that decision.
· However, if there are other contractual terms
which clearly have the effect of superseding, or providing
for an entitlement to avoid or deduct from, a payment
directed to be paid by an adjudicator's decision, those
terms will prevail.
· Equally, where a paying party is given an entitlement
to deduct from or cross-claim against the sum directed
to be paid as a result of the same, or another, adjudication
decision, the first decision will not be enforced or,
alternatively, judgment will be stayed.
Here, Triangle, who had determined Bovis' contract for
failing to proceed regularly and diligently, was found
to be entitled to rely on both the contract and the
adjudicator's third decision (that the determination
was valid) to withhold payment of the sum directed to
be paid under the adjudicator's first decision. Bovis'
contention (namely that the determination of its employment
was invalid) was not sufficient, in the absence of either
an adjudicator's decision to that effect or, alternatively,
any sufficient evidence to sustain that contention,
to enable them to counter this.
The Construction Centre Group Limited -v- The Highland
Council (23 August 2002)
Here
Lord Macfadyen had to consider a dispute arising in
relation to the Small Isles and Inverie Ferry scheme.
The defenders resisted payment of an adjudicator's decision
in the sum of £250k.
By clause 66 of the contract, the parties had to give
"effect forthwith to every decision of ... the
Adjudicator on a dispute given under this clause"
unless that decision was revised by agreement or the
dispute had been referred to arbitration and an arbitral
award had been made. The Highland Council argued that
the effect of awarding summary judgment would be to
give a final judgment in place of an interim decision.
Lord Macfadyen disagreed, saying that not to allow enforcement
would obstruct the purpose of section 108 of the HGCRA.
One of the points of adjudication was to obtain payment
on a provisional basis. CCGL were not asking the Court
to endorse the soundness of the adjudicator's decision
but were asking the Court to recognise that the parties
had committed themselves contractually to implement
that decision.
The Highland Council also argued that as they had a
claim against CCGL for the payment of liquidated damages
(quantified at a sum in excess of £250k), they
were entitled to refuse to pay the sum awarded. A valid
notice had been served in pursuant to section 111 of
the HGCRA. CCGL argued that as the liquidated damages
claim could have been advanced before the adjudicator,
the Highland Council could not rely on it now to resist
enforcement. Further, CCGL submitted that section 111
referred to notices in relation to payment certificates
and not to notices in respect of adjudicator's decisions.
Lord Macfadyen held that as the Highland Council had
chosen not to advance their retention argument before
the adjudicator, they could not rely upon it now. That
said, the right of retention was not lost and that right
remained against any future sum, which might fall due
to CCGL under the contract. However, there had been
nothing to prevent the Highland Council from putting
forward their claim for liquidated damages in the adjudication.
It was now too late. Section 111 was not intended to
permit the giving of a withholding notice in respect
of an adjudicator's award.
Lord Macfadyen concluded that "it would...be destructive
of the effectiveness of the institution of adjudication
if a responding party could decline to put forward an
available defence in the course of the adjudication,
then give a section 111 notice seeking to withhold on
that ground the sum awarded by the Adjudicator".
Petition of Edinburgh Royal Joint Venture (2 August
2002)
Here the Edinburgh Royal Joint Venture had resisted
payment following an adjudicator's decision in favour
of Broderick Structures Ltd. The adjudication rules
were based on the 1998 ORSA Rules. One amendment stated
that no party should make any application whatsoever
to a competent court in relation to the conduct of the
adjudication or the decision of the adjudicator until
completion of the last phase of the works or termination
of the sub-contract and until the prior written consent
of both contractor and sub-contractor had been obtained.
However, the adjudication rules also stated that every
decision of the adjudicator was to be implemented without
delay and the parties "shall be entitled to summary
enforcement" of an Adjudicator's decision regardless
of whether it was subject to any challenge or review.
ERJV claimed that the adjudication rules meant that
all disputes were to be postponed (and this included
enforcement of any adjudicator's decision) until after
conclusion of the contract, such that they could all
be raised at one time. Coutts QC considered that this
position was unsound and selective in that it did not
take account of all of adjudication rules and therefore
could not be sustained. Broderick were not seeking to
challenge the decision of the adjudicator, but merely
to enforce their contractual rights. A distinction was
made between an application to the Court after completion
of the work, and an application for summary enforcement
of an adjudicator's decision made during the work.
J T Mackley & Company Limited -v- Gosport Marina
Limited (3 July 2002)
In this case, HHJ Seymour QC had
to consider an attempt to refer a dispute under an ICE
contract to arbitration. Previously there had been two
adjudications under the contract which had been favourable
to Mackley. Gosport, the Employer, sought to arbitrate
the disputes.
However, clause 66(6) of the ICE Conditions states that
a decision of the engineer was a condition precedent
to the entitlement of a party to a contract to refer
a dispute to arbitration. Here there had been no reference
of the dispute to the engineer, who had had no part
in the adjudication.
HHJ Seymour held that the requirement for a decision
of the engineer under clause 66(6) applied even where
a party was seeking to challenge the decision of an
adjudicator. References to arbitration had to be made
in accordance with the relevant arbitration clause.
The Judge held that the form of words of section 108
of the HGCRA:
"makes it plain...that arbitration is only available
as a means of challenging the decision of an adjudicator
if the relevant contract so provides or an ad hoc arbitration
agreement is made. Where it is sought to rely on an
arbitration clause in the relevant contract, it seems
to me to be obvious that the ability to do so, and the
terms upon which such may be done, fall to be determined
under the relevant arbitration clause."
Therefore although the matters had been the subject
of an earlier adjudication, under the terms of this
contract, a reference to the engineer had to be made
before any reference to arbitration could be contemplated.
Gillies Ramsay Diamond -v- PJW Enterprises
Limited (27 June 2002)
Lady Paton, in Scotland, had to consider
an adjudication concerning a professional negligence
claim. PJW employed Diamond as contract administrators
on a refurbishment contract in Glasgow. During the course
of the works a dispute arose which resulted in the termination
of Diamond's appointment. PJW employed others in Diamond's
place, brought a claim for professional negligence against
Diamond and then referred that claim to adjudication.
The adjudicator found against Diamond who resisted paying,
claiming that the adjudicator did not have the power
to award damages and that an appointment as a contract
administrator was not a construction contract as defined
by the HGCRA. Lady Paton held that Diamond's contract
administration services qualified as surveying work
thereby falling within the HGCRA. By agreeing to carry
out contract administration services, Diamond had entered
into an agreement to do surveying work.
It is interesting that although Lady Paton expressed
doubts about the merits of the decision, she concluded
that she could not interfere with that decision. Lady
Paton recognised the potential difficulties caused by
the short time limits imposed by adjudication but stated:
"There is nothing in the 1996 Act...in precedent
or principle, to suggest that an adjudicator seeking
to resolve a dispute...is not entitled to reach conclusions
about the manner in which a professional person has
carried out his or her duties in the course of the construction
contract - and that includes conclusions as to whether
there might have been any professional negligence. ...While
therefore, it may on one view seem startling that a
professional person acting as an adjudicator should
be invited to rule within 28 days on the important and
often difficult and delicate question as to whether
a fellow professional has failed in his or her duty
to such extent that there has been professional negligence,
yet it seems that a proper construction of the statutory
language...permits this very result - although importantly,
a "provisional interim" result."
Thus Lady Paton has provided judicial confirmation that
there is nothing to stop a claim of professional negligence
being made in an adjudication.
Impresa Castelli SpA -v- Cola Holdings
Limited
(2 May 2002)
HHJ Thornton QC had to consider various
issues concerning the interpretation of a contract,
which incorporated the 1981 JCT Standard form with Contractor's
Design. These included whether the court had jurisdiction
to consider a number of the claims in relation to defects.
The contract had a complex dispute resolution procedure.
This provided that certain disputes, (including whether
the works were carried out in accordance with the contract),
arising prior to Practical Completion, could not be
referred to arbitration but adjudication. Following
that adjudication, the result could be arbitrated but
only once Practical Completion had been achieved. An
"adjudication matter" could not be arbitrated
upon unless there had been an adjudication first. Equally
no adjudication could arise once practical completion
had occurred.
Impresa said that the Cola's counterclaim, based on
breaches of contract that lead to defective work, was
covered by the adjudication provisions of the contract.
As they had not been adjudicated, they could not be
arbitrated (or litigated since it appears that the right
to arbitrate had been waived). HHJ Thornton QC rejected
this argument. First, the disputes about the existence
and effect of the alleged defects came to light after
termination of the Works. The dispute was about damages
recoverable as a result of that termination. Second,
the dispute related to whether works had been executed
in accordance with the contract conditions and not whether
the works were being executed in accordance with the
contract conditions. The adjudication provisions in
the contract related to works that were ongoing and
not the state of works once that work had been completed
or terminated.
R
G Carter Ltd -v- Edmund Nuttall Ltd (18 April 2002)
R
G Carter sought an order that the appointment of an
Adjudicator should be revoked and that some other person
should be appointed in his place or a similar declaration
in undefined terms. Carter had referred a dispute under
a DOM/1 subcontract to adjudication specifically asking
the RICS not to appoint the particular adjudicator it
had subsequently appointed.
The grounds for the declaration were that the adjudicator
(it was claimed) appeared to have pre-judged the issue
before the matter was referred to him and furthermore
had expressed a willingness to proceed to a Decision
without the matter having been referred to him.
HHJ Bowsher QC refused to grant the relief sought, but
in relation to second ground, provided guidance as to
what was required before a Decision could be made:
"RG Carter Limited also object that Mr Richards
has indicated a willingness to decide the dispute without
having received a Referral Notice from RG Carter Limited.
The scheme of the contract, like the scheme set out
in the Schedule to the HGCRA 1996, provides that first
a notice of adjudication is sent to the respondent and
to the adjudicator and then not more than 7 days later
a Referral Notice is sent to the Adjudicator and the
respondent. In litigation terms, that is rather like
the service of a Claim Form followed by a Statement
of Case, or in old fashioned terms, a Writ followed
by a Statement of Claim. Mr Furst QC for Edmund Nuttall
Limited says that Mr Richards is in a quandary about
how to proceed. I do not know how he knows that, Mr
Furst QC submits that the adjudicator has a duty to
proceed and that the referring party, R G Carter Limited,
cannot stop the adjudication by failing, in breach of
contract, to serve a Referral Notice. Mr Richards seems
to have decided that he should go ahead and determine
the dispute referred to in the Notice of Adjudication
without a Referral Notice. That is like a judge saying
that he is going to try an action having received only
a generally indorsed writ without a Statement of Claim
or a Defence.... The adjudicator has not received the
"referral" nor any accompanying documentation
and so the time for the giving of his decision has not
begun to run and he has no further duty or jurisdiction."
Balfour Beatty Construction Ltd -v- The Mayor and
Burgesses of the London Borough of Lambeth
(12 April 2002)
Balfour Beatty sought to enforce the
decision of an adjudicator in relation to an extension
of time and loss and expense claim, and the application
was opposed by Lambeth on the grounds of bias and breach
of contract by the adjudicator in that he had employed
others to carry out some of his tasks.
In the adjudication, the Referral did not include a
critical path analysis in the accepted sense nor a reliable
as-built programme, so the Adjudicator requested further
details from both parties and also proceeded, with the
help of colleagues, to check the as-built information
adduced and to produce his own critical path analysis.
HHJ Lloyd QC observed that:
"It is now well established that the purpose of
adjudication is not to be thwarted by an overly sensitive
concern for procedural niceties ... Adjudication under
the HGCRA is necessarily crude in its resolution of
disputes. Errors of fact and law do not vitiate the
decision which has to be complied with, unless of course
it was not authorised and thus made without jurisdiction.
On the other hand adjudication under the JCT conditions
(which are typical of other forms) envisage that some
basic procedural principles have to be applied in order
that each party is treated fairly."
HHJ Lloyd QC went on say that:
"...in my judgment, the adjudicator not only took
the initiative in ascertaining the facts but also applied
his own knowledge and experience to an appreciation
of them and thus, in effect, did [Balfour Beatty's]
work for it.... In my judgment Mr. Richards exceeded
his jurisdiction by himself making good fundamental
deficiencies in [Balfour Beatty's] material, namely
the lack of a critical path and the method of analysis
adopted for demonstrating the criticality or otherwise
of the Relevant Events.... In my judgment constructing
(or reconstructing) a party's case for it without confronting
the other party with it is such a potentially serious
breach of the requirement of either impartiality or
fairness that the decision is invalid for it is a not
a decision which the adjudicator was authorised to make."
HHJ Lloyd QC also found on the facts that the adjudicator
had informed the parties that he intended to use assistants
to carry out some of his tasks, so the ground to resist
enforcement did not appear to have any prospect of success.
Parsons Plastics (Research & Development) Ltd
-v- Purac Ltd (CA) (12 April 2002)
The Court of Appeal had to consider
an appeal from the judgment of HHJ Kirkham. Parsons
had been successful in an ad hoc adjudication carried
out in accordance with the terms of the sub-contract
and not pursuant to the HGCRA.
Six days after the adjudicator's decision was given
and before paying any money pursuant to that decision,
Purac served a withholding notice pursuant to the contract.
Purac claimed that the costs to complete the works exceeded
the sum owing under the adjudication decision. The CA,
agreeing with the Judge, held that under the terms of
this particular contract it was open to Purac to set
off against the adjudicator's decision any other claim
they had against Parsons, as long as that claim had
not been determined by the adjudicator.
Chamberlain Carpentry & Joinery Ltd -v- Alfred
McAlpine Construction Ltd (25 March 2002)
HHJ Seymour QC had to consider arguments
being made by McAlpine to resist enforcement of an adjudicator's
decision. The Chamberlain Notice of Adjudication listed
eight heads of claim. Thus McAlpine argued that Chamberlain
had sought to refer not a single dispute but a number
of disputes. HHJ Seymour QC (just as HHJ LLoyd QC had
in McLean v Swansea) accepted that it is possible to
contemplate a substantial dispute with a number of different
elements. Here it was plain that the dispute referred
by Chamberlain was how much it was due to be paid by
McAlpine.
McAlpine had included its own adjudication rules as
part of the contract. These included that the referring
party (provided it was not McAlpine when each party
would bear their own costs) should be responsible for
all of the costs incurred by all of the parties in the
adjudication on a full indemnity basis. Thus one of
Chamberlain's requests, following these rules, was that
the adjudicator made an assessment of the costs incurred
by McAlpine. McAlpine said this was a separate dispute.
The Judge disagreed saying that requesting an assessment
of costs was a natural consequence of the referral.
Finally McAlpine suggested that, since the adjudicator
had to go "hunting through" the material presented
to him by Chamberlain to find out which the relevant
interim application was, the dispute had not been identified
with sufficient clarity. This was given short shrift,
although of course any documentation should be submitted
to an adjudicator in as "user-friendly" a
way as possible.
Edmund Nuttall Ltd -v- R G Carter Ltd
(21 March 2002)
HHJ Seymour QC refused to enforce the
decision of an adjudicator since he had no jurisdiction.
When Nuttall commenced adjudication proceedings, the
notice included a claim for an extension of time based
on a claim document prepared in May 2001. When the Referral
Notice was served, it included a delay analysis prepared
by an expert on behalf of Nuttall, which made a claim
for an identical extension of time. However, the justification
for the extension was different to that put forward
in the May claim.
The question the Judge had to answer was not whether
there was a dispute between Nuttall and Carter as at
the date of the Adjudication Notice, but whether the
dispute upon which the adjudicator adjudicated was that
which was the subject of the Adjudication Notice. The
Judge rejected the submission that the dispute should
be identified by reference, at least principally, to
what was being claimed. Nuttall suggested that it was
enough that the extension of time being sought was always
the same and irrelevant that the facts and arguments
relied upon in the expert report were significantly
different from the facts and arguments relied upon in
the previous claim.
The Judge said:
"the whole concept of adjudication is that the
parties to an adjudication should first themselves have
attempted to resolve their differences by open exchange
of views and, if they are unable to, they should submit
to an independent third party for decision the facts
and arguments which they have previously rehearsed amongst
themselves. If adjudication does not work in that way
there is the risk of premature and unnecessary adjudications
in cases in which, if only one party had had a proper
opportunity to consider the arguments of the other,
accommodation might have been possible".
Here, as the adjudicator had considered the expert report,
the Judge ruled that he had considered and made decisions
upon something which had not been referred to him for
a decision. The decision was made without jurisdiction
and was therefore unenforceable.
RJT Consulting Engineers Ltd -v- DM
Engineering (Northern Ireland) Ltd (CA) (8 March 2002)
The judgment if the Court
of Appeal is important because it helps to clarify the
requirement of Section 107 of the HGCRA, namely that
to take advantage of adjudication, the relevant construction
contract must be in writing or, at least, evidenced
in writing.
At first instance, HHJ MacKay had taken what he termed
to be a "purposive" approach to considering
whether a contract was evidenced in writing. He had
held that it was not necessary to identify all the terms
of a contract and that since there was in this case
a "comparatively great" amount of written
material this would suffice. This material included
a fee account, which identified the parties and place
of work and meeting minutes, which identified the type
of work being carried out.
The Court of Appeal disagreed with HHJ MacKay's approach.
Invoices, for example, are evidence of the existence
of a contract. They do not define it. The whole of the
agreement had to be evidenced in writing. The CA said
that:-
"Certainty is all the more important when adjudication
is envisaged to have to take place under a demanding
timetable. The Adjudicator has to start with some certainty
as to what the terms of the contract are
The written
record of the agreement is the foundation from which
a dispute may spring but least the Adjudicator has to
be certain about is the terms of the agreement which
is giving rise to the dispute."
A record of an agreement must be a record of a complete
agreement. However one of the Appeal judges, Auld LJ
had a slightly different view. He considered that it
was the terms of the agreement material to the issue
or issues giving rise to the dispute, which were important,
not that every term however trivial must be expressly
recorded or incorporated.
Watkin Jones & Son Ltd -v- Lidl
UK GMBH
(February 2002)
In a previous adjudication,
Watkin Jones had been awarded almost £350k on
the basis that no notice had been served by Lidl against
application 11 in accordance with clause 30.3.3 of the
JCT Standard Form of Contract with Contractor's Design.
By clause 30.3.5, without such a notice, the sums applied
for became due and payable.
Lidl said that the new dispute related to the question
of what was the properly calculated sum due under application
11. HHJ LLoyd QC held that the subject matter of the
new adjudication was a dispute about the value of application
11. That issue had been resolved in the first adjudication
where the adjudicator had considered the application
for payment and the terms of the contract. Accordingly,
there was no dispute.
Total M&E Services Ltd -v- ABB
Technologies Ltd
(26 February 2002)
HHJ Wilcox had to consider an application
for the enforcement of a decision where ABB held that
the Adjudicator had no jurisdiction to determine the
dispute because the Notice of Adjudication had been
given in the name of a different company. HHJ Wilcox
rejected this argument since at all times both parties
had been well aware at all stages of the true identity
of the contracting party. No one had been misled. However
he did caution parties to be careful where there are
similar company names or a number of subsidiaries in
a group of companies. Here precision might well be required.
Total had also tried to recover their costs of the adjudication
as a separate head of damage. These costs were considerable,
being almost £93k - Total having been awarded
£462k in the adjudication. It was suggested that
if a party fails to pay under a construction contract
than it was foreseeable that the other party to that
contract would go to adjudication and incur costs. HHJ
Wilcox did not allow this. There was no provision in
the HGCRA for the recovery of the costs of an adjudication.
Therefore, they could not be recovered as damages. To
allow such a claim would be to "subvert" the
Scheme.
ABB claimed that the adjudicator did not have any jurisdiction
to base his decision on additional works carried out
by Total. These were a series of separate oral agreements.
Again the Judge disagreed. The additional works were
the same type of work, which was the subject of the
original sub-contract. Thus the scope of that work was
enlarged. S107(3) of the HGCRA refers to agreements
made otherwise than in writing. Provided that the agreement
refers to terms, which are in writing, then it is an
agreement in writing. This was a contract varied orally
by the parties. The contract as varied fell within the
scope of S107.
Finally, at the end of his judgement HHJ Wilcox ordered
that ABB pay into court (and not direct to Total) pending
a full hearing, that part of the claim which related
to a set off claim by ABB. The adjudicator had refused
to consider the merits of that part of the claim in
the absence of a valid withholding notice.
Solland International Ltd -v- Daraydan Holdings Ltd
(15 February 2002)
Daraydan resisted a claim for summary enforcement of
an adjudicator's decision on the grounds that it was
entitled to raise now matters said to be relevant to
what sum should be paid as a result of an adjudicator's
decision.
Daraydan claimed a right to set off a claim for liquidated
damages under a related contract, which exceeded the
total amount awarded. It also maintained that it had
a claim for allegedly defective works and it was entitled
to abate the sums awarded by the adjudicator by the
amount of these claims, which were disputed by Solland.
HHJ Seymour QC held that the fact that there were apparently
other disputes between the parties did not constitute
any reason not to enter judgment for the sums awarded
by the adjudicator. The parties had entered into a contract,
which said that the decision of an adjudicator was binding
pending final determination by the Court. There was
no provision in that contract to set off or deduct against
that award.
The judge was also asked to stay enforcement on the
grounds that the adjudicated dispute was but one of
a series of complex disputes concerning far greater
sums than current one. He declined to do so. The question
here was who should hold the money, which the adjudicator
had decided, should be paid to Solland while the disputes
between the parties were resolved. On the facts here,
"the function of the Court" was to enforce
that decision.
C&B Scene Design Concept Ltd -v- Isobars Ltd
(CA) (31 January 2002)
The Court of Appeal overturned
the first instance judgment of Mr Recorder Moxon-Browne
QC.
Unfortunately, although the CA recognised that the question
of whether failing to give a withholding notice within
the stipulated of time was one of some importance to
the construction industry and one where there has been
a difference of judicial opinion, they did not think
it right (in the absence of argument from Isobars who
were not represented) to express a view which would
only be obiter (i.e. not binding).
Instead, the only question, which the CA believed, it
was necessary to consider was whether the error on the
part of the adjudicator, who had failed to appreciate
that the contractual provisions had been superseded
by the Scheme, went to his jurisdiction or was merely
an erroneous decision of law on a matter within his
jurisdiction.
It is only when the adjudicator decides matters beyond
the dispute referred that he has no jurisdiction. Here
the scope of the dispute was agreed, namely the employer's
obligations to make payment or otherwise. Thus the adjudicator
had to resolve as a matter of law whether certain contractual
clauses applied or not and if they did what the effect
was of the failure to serve a timeous notice. Whist
the adjudicator was as a matter of law incorrect, that
error was within the scope of the dispute agreed between
the parties. The adjudicator therefore answered the
right question but in the wrong way and the claimant
was therefore entitled to enforcement of the adjudicator's
decision by means of summary judgment.
Karl Construction (Scotland) Ltd -v- Sweeney Civil
Engineering (Scotland) Ltd (Appeal)
(22 January 2002)
The Appeal Court upheld
the judgment at first instance and the decision of the
adjudicator.
Since the original Judgment, Sweeney had gone into liquidation.
Karl's position was that the dispute referred to the
adjudicator had changed as a result of Sweeney's written
response to points made in the adjudication by Karl.
Quite simply, the CA disagreed with this contention
stating it to be unsound. The adjudicator had been charged
with ascertaining the law and therefore had no option
but to apply the relevant law as she saw it.
Shimizu Europe Limited -v- Automajor Limited (17 January
2002)
HHJ Seymour QC had to consider whether an adjudicator
had exceeded his jurisdiction. Part of the award related
to alleged variations. Included in the calculations
of these variations were amounts in respect of alleged
variations to smoke ventilation works. This was notwithstanding
that the adjudicator did not consider that there had
been any variation in those works.
Automajor believed that this represented an error, which
went to the jurisdiction of the adjudicator. Accordingly,
the Adjudicator was invited to amend his decision pursuant
to the slip rule
HHJ Seymour QC commented that if the Adjudicator had
made an error, and he did not say that he necessarily
had, then the proper mechanism for correcting that error
was either in the course of final account negotiation
or by referring the dispute to arbitration.
Here, Automajor had only paid up that part of the decision,
which they did not challenge. HHJ Seymour QC commented
that it could not be right that it is open to a party
to an adjudication to both "approbate and to reprobate
a decision of the adjudicator." Either the whole
of the relevant decision must be accepted or the whole
of it must be contested.
That said, HHJ Seymour QC continued, if an adjudicator
had a made decision both on the question of how much
money is due to a party and as to what (if any) extension
of time a party is entitled, it may be open to a party
to that adjudication to accept the determination in
relation to the sum due but to dispute the assessment
of the extension of time or vice versa. Here, two separate
questions had been referred to the adjudicator. However,
what you cannot do is challenge part of a financial
award or part of an extension of time decision.
Finally, HHJ Seymour QC held that, Automajor by inviting
the adjudicator to correct the award under the slip
rule, had accepted that the award was valid. The invitation
to correct the award could only be consistent with recognising
that award as valid. Presumably, therefore, Automajor
would have been estopped from challenging the jurisdiction
had their other arguments succeeded.
Isovel Contracts Ltd (in Administration) -v- ABB
Technologies Ltd (30 November 2001)
Deputy Judge Berry QC was invited to
extend the principle of set off in insolvency cases
from companies in liquidation to companies in administration.
When the CA heard the case of Bouygues v Dahl-Jensen,
it held that where there were latent claims and cross
claims between the parties, Rule 4.90 of the 1986 Insolvency
Rules would apply to provide for a mutual set off. In
such circumstances, summary judgment was not the appropriate
way to proceed. Dahl-Jensen had of course, gone into
liquidation. Here, the DJ awarded summary judgment in
favour of the claimant, but refused to stay the judgment
hearing pending the hearing of a cross claim. Although
the case related to payment of certificates under a
DOM Sub-Contract, there had been no adjudication and
the Deputy Judge was not persuaded that the Herschel
principle (that a stay may be granted if there was a
real doubt as to the claimant's ability to repay if
it subsequently loses a related action) applied here.
Oakley
and Anr. -v- Airclear Environmental Limited and Anr.
(October 2001)
Etherton J had to consider
an application to set aside a statutory demand. Although
the parties had intended to enter into to the NAM/T
form of contract, no formal contract was ever concluded.
Oakley paid Airclear after deducting various sums for
delay costs and other items. Airclear did not agree
with this.
Airclear then referred the dispute to adjudication in
which Oakley took no part. The adjudicator decided that
Oakley should pay Airclear. Oakley did not pay. Airclear
issued a Statutory Demand. Oakley applied to set that
aside arguing that as there was no contract, the adjudicator
did not have jurisdiction, having been appointed pursuant
to a contract or that if there was a contract it was
not in writing, as required by Section 107 and so the
debt was disputed.
Etherton J held that the judge was entitled to find
that the parties shared an assumption that the agreement
was governed by NAM contracts. However, although Oakley
could have been stopped from resiling from that assumption,
there was insufficient evidence to show that it was
unconscionable for Oakley to do so. Thus the adjudicator
had not been validly appointed and his decision was
a nullity. As a result the Statutory Demand could not
be based on a debt and so the Demand was set aside.
Stubbs Rich Architects-v- W H Tolley
& Son Limited (August 2001)
An adjudicator's fees fall
within the words "anything done or omitted in the
discharge or purported discharge of his functions as
adjudicator." These fees may be challenged if,
and only if, the adjudicator has acted in bad faith.
The criterion of the reasonably competent solicitor
is not a relevant test in determining the reasonableness
of an adjudicator's fees. A court must be very slow
indeed to substitute its own view of what constitutes
reasonable hours.
Maxi
Construction Management Ltd -v- Mortons Rolls Ltd (August
2001)
The
pursuers contended that it was entitled to an interim
payment in terms of a document which it characterised
as "Application for Payment No. 10".
Lord Macfadyen held that the application did not constitute
a "claim by the payee" within the meaning
of paragraph 12 of the Scheme,
a. because it was an application for agreement of the
pursuer's valuation in terms of paragraph 2.5.20 of
the Employer's Requirements, and not a claim for payment
at all, and
b. because it did not, in any event, comply with the
requirements of paragraph 12 of the Scheme in that it
did not specify the basis on which it was calculated.
Further the application did not meet the specific contractual
requirements of an Application for Interim Payment nor
the requirement that it be accompanied by a detailed
build-up of the values of the work executed.
Millers
Specialist Joinery Company Ltd -v- Nobles Construction
Ltd (August 2001)
Section 111 does not apply only for
the purposes of adjudication.
The claimant sought summary judgment in respect of ten
unpaid invoices.
HHJ Gilliland QC said, "the effect of Section 111
is to prevent the paying party if he does not give appropriate
notice from exercising his right to retain or withhold
payment of monies which would otherwise be due and payable,
but for the existence of some right to withhold payment.
Section 111 refers to "withholding" payment
generally. It must have been intended to include situations
where the paying party was legitimately entitled under
the general law under the terms of the contract to withhold
monies which were otherwise payable".
The Judge concluded that the claimant would not have
been entitled to summary judgment on the merits of the
claim. However, he gave summary judgment because no
valid withholding notice had been given under Section
111.
Gibson Lea Retail Interiors Ltd -v-
Makro Self-Service Wholesalers Ltd (July 2001)
In Section 105(3) of the HGCRA "fittings
forming part of the land" was a reference to fixtures.
Gibson Lea's work involved shop fitting.
HHJ Seymour QC thought it clear that shop-fitting did
not amount to construction operations unless it consisted
of the construction of "structures forming, or
to form, part of the land (whether permanent or not)"
or "installation in any building or structure of
fittings forming part of the land", as per sections
(105)(1)(a) and (c) of the HGCRA. None of the items
supplied by Gibson Lea were fixtures. The Act did not
apply.
City Inn Ltd -v- Shepherd Construction
Ltd
(July 2001)
Court proceedings are not an appeal against
the decision of an adjudicator.
The defendant had argued that the effect of the adjudicator's
award of a five-week extension of time was that City
Inn had to demonstrate that the award was not justified.
Lord Macfadyen confirmed that adjudication provided
for an interim determination of the issues between the
parties. Should the dispute ultimately go to litigation
or arbitration then the matters will be decided afresh
as if there had been no adjudication.
British Waterways Board (Judicial
Review)
(July 2001)
This was an action for judicial review.
The petitioners submitted that there was no "dispute"
between the parties, having regard to the terms of the
contract between them. The joint venture maintained
that there was a dispute within the meaning of section
108 of the Housing Grants, Construction and Regulations
Act 1996 and that any provision in the contract that
purported to redefine a "dispute" fell to
be disregarded, in the light of section 108(5).
Having decided that there was an arguable case as to
whether there was a dispute the Court then had to decide
whether, on the balance of convenience, the Court should
not permit an adjudication to proceed pending resolution
of that case.
Lord McCluskey refused to disallow the adjudication
on the basis that both the 1996 Act and the substituted
Clause 90 envisaged the desirability of proceeding to
a speedy resolution of matters in issue. If the matter
was not already in issue, as argued, it could be put
in issue without delay, but the resolution thereof would
be delayed for some four weeks or thereby. The parties
having had some months to investigate and consider their
respective positions and to research matters, the extra
cost of putting these matters in an appropriate form
before an adjudicator were likely to be not very great.
S L Timber Systems Limited -v- Carillion
Construction Limited (June 2001)
Error of fact or law on the part of the
adjudicator will not afford ground for refusal of enforcement,
unless the error was of such a nature that the adjudicator's
decision was, as a result, one which he had no jurisdiction
to make.
The adjudicator erred in:
· Lumping together the defenders' failure to
give a section 110(2) notice with their failure to give
a timeous section 111 notice. Failure to give a section
110(2) notice does not, in any way or to any extent,
preclude dispute about the sum claimed.
· Holding that any and every attempt to dispute
a claim made under a construction contract is to be
regarded for the purposes of section 111 as an attempt
to "withhold" payment, and therefore as requiring
a notice of intention to withhold payment. It remains
incumbent on the claimant to demonstrate, if disputed,
that the sum claimed is contractually due. If he can,
he is protected, by the absence of a section 111 notice,
from any attempt to withhold all or part of the sum
due on the basis that some separate ground exists.
However, the adjudicator's error did not take him out
of the proper scope of his jurisdiction. He made an
intra vires error rather than one which rendered his
decision ultra vires. His decision was wrong, but not
in such a way as to be invalid and reducible.
The Act does not qualify the expressed intention that
an adjudicator's provisional award should be enforced
pending final resolution of the dispute, to the effect
of making an exception in the case where the claimant,
although not in liquidation, can be shown to be insolvent.
William Naylor t/a Powerfloated Concrete
Floors -v- Greenacres Curling Limited (June 2001)
The Petitioners were seeking interdict
and suspension of a second adjudication started by the
Respondents on essentially the same dispute as the second
adjudicator had not resigned as required by paragraph
9.2 of the Scheme.
Having earlier granted such an interdict and suspension
during a hearing at which the Respondents were not represented,
Lord Bonomy recalled the interim interdict, holding
that the Court of Session was being asked to exercise
its supervisory jurisdiction and that since 1985 it
had been mandatory to present applications to the supervisory
jurisdiction of the Court by petition for judicial review
rather than by ordinary petition (Rule 58.3.-(1) of
the Rules of the Court of Session applied in two respects).
Comment: In so doing, he was neither ruling that the
second adjudication should proceed nor be stopped; he
was ruling that an ordinary petition was the wrong approach
that required to be taken. This is a technical and procedural
matter in relation to the Rules of the Court of Session
which would require a petition for Judicial Review to
have it resolved.
Ballast plc -v- The Burrell Company
(Construction Management) Limited (June 2001)
Lord Reed was asked to declare that
a decision by an adjudicator was to be set aside as
a nullity.
The basis for the petition was that the adjudicator
had answered the issues put to him as "Not valid"
on the basis, it appeared to Lord Reed, that a departure
from the JCT conditions necessarily entailed that no
adjudication could be carried out. This was rejected
and accordingly the adjudicator had failed to exercise
his jurisdiction to determine the dispute put to him
for a decision.
The respondent had argued that as a Decision had been
issued by the adjudicator - even if incorrectly - the
matter was decided until finally resolved by litigation,
arbitration or agreement and hence no subsequent adjudication
proceedings on the same dispute could be instigated
by the petitioners.
C & B Scene Concept Design Ltd
-v-Isobars Ltd
(June 2001)
It was held that an error in law made
by the adjudicator constituted an excess of jurisdiction
with the result that the court refused enforcement.
Recorder Moxon Browne QC agreed with Isobars that if
no election was made between payment alternatives A
and B of Appendix 2 of the JCT Design & Build Contract
payment provisions, the entirety of clause 30 of the
contract must fall away and the Scheme applied. The
adjudicator had erred in law in basing his decision
upon the provisions of clause 30.3.5.
The adjudicator had answered the 'wrong question' and
thus he had acted in excess of his jurisdiction. Enforcement
of the decision was refused and Isobars was given leave
to defend the action and pursue its counterclaim.
Barr Limited -v- Law Mining Limited
(June 2001)
Lord Macfadyen expressed some reservations
about the comments made by HHJ Thornton QC in Sherwood
& Casson -v- McKenzie that the decision of an Adjudicator
whose validity is challenged as to its factual legal
conclusion or as to procedural error remains a decision
that is both enforceable and should be enforced.
Lord Macfadyen made a distinction between a decision
that is unsound but valid and a decision that is invalid
because it was not one that the Adjudicator had power
to make. In addition, he did not rule out the possibility
that that a procedural error may produce a result that
the Adjudicator makes a decision that is beyond his
jurisdiction. This is in slight contrast to the treatment
of the "procedural error" by Mr Justice Dyson
in Macob.
The defenders contended that since the dispute between
the parties included three separate elements, issues
as to the amounts due in two separate interim certificates
and a claim for an extension of time, there were in
fact three disputes. However, Lord Macfadyen said that
at first instance the Adjudicator must decide for himself
whether what is at issue is a dispute or several disputes.
It is easy to sub-divide and analyse what is in substance
one dispute into its component parts and label each
part a separate dispute. This is not the correct approach.
A realistic view must be taken. Here, the dispute was
what sum is due and owing to the pursuer.
Defences were also raised on the basis that the adjudicator
did not have jurisdiction to consider applications for
payment which had not been certified (i.e. therefore
no sums were due). This was rejected.
Finally, since the contracts were rescinded by the Defender,
it was argued that since the adjudication notices did
not distinguish between sums allegedly due before and
after that rescission, where the adjudicator decided
that the contract had indeed been rescinded he could
not continue. In one of the adjudications Lord Macfadyen
agreed that the adjudicator had not considered this
point. Therefore any sum which flowed from this part
of the decision could not be enforced.
It was submitted that it was possible to separate the
"good parts" from the "bad parts"
of the decision. This was not disputed by the parties
and nothing further was said about the question as a
legal issue. It is of course in contrast to the KNS
and Farebrother cases.
Mitsui Babcock Energy
Services Limited (June 2001)
Mitsui sought Judicial Review of a decision
by an Adjudicator that she did not have jurisdiction
to consider a dispute which concerned the construction
of two boiler plants on a site leased to a company within
the overall site at BP Grangemouth whose primary activity
was the processing of chemicals and oil on the petrochemical
complex.
The Adjudicator had viewed the situation as being a
dispute which fell within the exclusion contained in
section 105(2)(c) of the 1996 Act.
Mitsui's position was that as the combined heat and
power complex was within a site on land leased to a
separate company, the primary activity of the site was
the generation and supply of steam which was therefore
not within the section 105(2)(c) exclusion.
Lord Hardie decided that on the facts of the case the
installation of the boiler plant was to further the
primary activity of the processing of chemicals and
oil on the petrochemical complex and hence fell within
the exclusion, and dismissed the petition accordingly.
Fence Gate Ltd -v- James R Knowles
Ltd (May 2001)
An adjudicator had awarded James R Knowles
payment for invoices for providing evidence as witness
of fact and assisting in an arbitration. It was held
that these were not matters falling within the definition
of a construction contract within sections 104(2) of
the HGCRA.
The Judge thought it clear that while giving factual
evidence or assisting at an arbitration was not in itself
a construction operation as defined by section 105,
it did not necessarily follow that these activities
were not carried out in relation to construction operations.
However the giving of factual evidence by an architect
is not the "doing" of architectural designing
or surveying work itself. Similarly, providing litigation
support at an arbitration is not the same as providing
advice on the building or engineering. They are different
and distinct activities.
Disputes in relation to payment of fees properly payable
for services rendered as a witness of fact or assisting
at an arbitration or litigation are not disputes in
relation to construction operations, even if that dispute
concerns construction operations. They are disputes
in relation to litigation support work and arise under
a contract provision of litigation support services.
Faithful & Gould Limited -v-
Arcal Limited and Ors. (May 2001)
Application by an adjudicator against
Arcal Limited and Messrs Martin and Dawson of Deloitte
and Touche (the Receivers) for payment of his fees.
It was held that:
· An adjudicator must be a natural person acting
in his personal capacity. However, he is not required
to sue for his fees in that capacity.
· On the facts of the case, the Defendants were
bound to pay the adjudicator's fees by an agreement
between their joint agent (Mr Klein) and the adjudicator,
alternatively by their conduct they are estopped from
denying the authority of Mr Klein.
· By reason of the defendants' conduct in the
proceedings, costs were awarded against them on an indemnity
basis.
Re A Company (number 1299 of 2001)
(May 2001)
In the absence of a Section 111 Withholding
Notice, a contractor has an undisputed debt for the
amount demanded in an application for payment. This
debt may form the basis of a statutory demand, which
if unpaid within 21 days may justify a petition to wind
up the debtor.
The main contractor's surveyor had certified the sums
were due and the right to withhold had been forfeited
as a result of the main contractor's breach of Section
111. The Court refused to restrain the winding up petition.
It also refused to exercise its discretion to dismiss
the petition because the main contractor had failed
to take any steps to pursue its cross claim for set
off and/or abatement (which could have extinguished
the debt claimed) in adjudication or other proceedings.
RJT Consulting Engineers
Limited -v- DM Engineering Limited (May 2001)
HHJ MacKay considered an application
for a declaration that the agreement between the parties
was not an agreement in writing as provided for by section
107 of the HGCRA. HHJ MacKay said that section 107 was
an inclusive not an exclusive piece of legislation.
The purpose of t |