More than one aspect to adjudication

We take a look at interesting adjudication cases that have taken place recently.

A number of other important judgments have been handed down regarding adjudication in 2015 and a selection are briefly summarised below.

St Austell Printing v Dawnus Construction

The TCC confirmed that limiting the parts of a claim to refer to adjudication was not just permitted but is “to be encouraged”. The referring party had “pruned” its notice of adjudication to include only the measured work element of an interim application and omitted its loss and expense claim. Coulson J held that an adjudicator does have jurisdiction to order payment of only part of an interim application. Limiting the claim in this way did not prevent the responding party from raising any defence.

PP Construction v Geoffrey Osborne

When making a request to an adjudicator to make a correction under the slip rule, parties should ensure that the request is sufficiently clear to enable the adjudicator to understand that an error has been made, what the error is and what correction is necessary.

Every construction contract must include a provision allowing an adjudicator to correct a clerical or typographical error in his decision. If the Scheme for Construction Contracts 1998 applies, then an adjudicator must make the correction within five days of the date when his decision was delivered and the corrected decision must be delivered to the parties as soon as possible.

Paice v MJ Harding

The TCC found that a failure by the adjudicator to disclose a phone call by the referring party to his office prior to a third adjudication between the parties gave rise to the possibility of bias and his decision was therefore unenforceable.

The telephone call had actually taken place two months before the adjudication, had lasted around an hour and was with the adjudicator’s office manager who told the adjudicator about the call. When questioned by the responding party after the adjudication had commenced, the adjudicator confirmed that he had had no contact with the referring party, save for the two prior adjudications between the parties.

Coulson J held that the call, if it were to take place at all, should have been disclosed following the adjudicator’s appointment in the third adjudication. The timing of the call was immaterial, it was the content that mattered and in the instant case the referring party had spoken at length of its disappointment at the first and second adjudications. An independent observer would consider that the failure to disclose, and particularly the outright denial of, any contact would suggest or confirm bias on the part of the adjudicator.

Khurana v Webster Construction

A residential occupier entered into an ad hoc adjudication agreement with the contractor and agreed in correspondence that the decision “shall be binding on both parties”.

HHJ Stephen Davies had to determine whether the parties had agreed that the decision would be finally binding, such that it could not be considered in subsequent court proceedings. It was held that clear words would be needed to exclude the right to subsequent court determination but this should not be applied overly strictly; it is common in the industry for parties to submit to binding determination by adjudication or expert determination. The key aspect was that the parties had agreed to adjudicate under the Scheme, “save that the decision … shall be binding on both parties”. It was held that this amounted to an agreed departure from the typical position under the Scheme, which is that the decision is only temporarily binding. The adjudication decision was therefore finally binding and could not be subsequently considered in court proceedings.

A stark reminder that when agreeing ad-hoc adjudication parties should expressly state whether the decision will be temporarily or finally binding.

Ecovision Systems v Vinci Construction

The parties’ contract contained three possible sets of terms under which either could refer a dispute to adjudication. The procedure in each was different. Vinci commenced an adjudication alleging defective design by Ecovision. The nomination form did not specify which terms the adjudication was under. Ecovision wrote to Vinci requesting clarification, noting that the adjudicator did not have jurisdiction unless that was made clear. The adjudicator eventually specified which procedure he considered he had been appointed under and Ecovision chose not to participate in the adjudication.

The Court granted the declaration sought by Ecovision; that the adjudicator’s subsequent decision was of no effect. An adjudicator typically does not have jurisdiction to determine whether he has jurisdiction. Making a choice between different sets of adjudication provisions would be such a determination where it made a material difference to how he should be appointed or the rules to be followed.

A key consideration in the instant case was that the different provisions would likely have led to different adjudicators being appointed and there were also significant differences in procedure. While the Court confirmed that it is not essential for a notice of adjudication or nomination form to identify the terms under which an adjudicator is appointed, it is suggested that this would be a very sensible approach. The referring party would have saved significant time and cost had it done so.

Leeds City Council v Waco

Waco’s applications for payment did not comply with the contract terms in that they were often several days late but these were certified and paid by LCC. One application was made early and was paid. The subsequent application, number 21, was also made prematurely but not paid. Waco obtained an adjudication decision for payment of application 21 in full.

LCC successfully commenced Part 8 proceedings, obtaining a declaration that application number 21 was invalid as it was submitted prematurely and that the sum was therefore not due.

Upon receipt of the first early application, the employer’s agent had made it clear that applications made before the contractually specified date would not be accepted. While the parties had adopted a course of dealing where applications made several days late would still be paid, there was no such course of dealing or agreement that an early application would be valid and the obligation to pay it did not arise.

Purton v Kilker Projects

The TCC enforced an adjudicator’s award for payment under an oral contract. Kilker argued that there was no contract and alternatively that even if there was a contract it was not the contract that was referred to adjudication. Kilker submitted that the Court could not be sure that the contract which had been referred to the adjudicator was the correct contract (was it the varied contract, the original contract or something else?).

Stuart Smith J referred to previous authority that, while not wholly determinative, the fact that services had been carried out by one party and paid for by the other is “plainly a very relevant factor” pointing in the direction of there being a contract.
In relation to the alternative argument that the Court could not be sure that the correct contract had been referred to the adjudicator, Stuart Smith J adopted a pragmatic view, noting that jurisdiction is dependent on the existence of a construction contract and a dispute under it, not on identifying each and every term with complete accuracy so that the process becomes a “formalistic obstacle course”.

This is another example of the Court upholding as a matter of policy the “quick and effective” (or, depending on your view, “rough and ready”) nature of adjudication.

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