Key points
- The TCC has upheld an adjudicator’s decision which presented two alternative outcomes
- Expect more adjudicators to adopt this approach
It does not appear that the fit out of Global Switch’s data hall at East India Docks House in London has gone well. There have been at least six adjudications and two trips to the Technology and Construction Court. Waksman J’s judgment in Sudlows Ltd v Global Switch Estates Ltd [2022] EWHC 3319 (TCC) decided the second of those court cases, with the judge considering whether or not to enforce the sixth adjudication award.
The facts
The contract between G (as employer) and S (as contractor) – a JCT 2011 design and build form – was signed in December 2017 and had a value of just under £15m. The adjudication in issue related to a claim by S for an extension of time over and above that granted in the fifth adjudication and for just over £12m of loss and expense. The relevant events (the JCT term for events entitling the contractor to more time) and relevant matters (the JCT term for matters entitling the contractor to loss and expense) which S relied on were the same.
In relation to the extension of time, the adjudicator, M, had to decide whether he was bound by the decision in the fifth adjudication that certain relevant events had occurred. S argued that he was and that, because nothing material had changed, M was “effectively bound to grant” the extension of time claimed. G, while accepting there were no different causes for delay other than those found to have existed in the fifth adjudication, argued that decision was not binding on M because the findings of fact that gave rise to the extensions of time were part of the previous adjudicator’s reasoning, and not part of his actual decision. G also wanted to submit new evidence to challenge the relevant events, in particular two reports by a third-party certification company.
The law
As Waksman J explained, the effect of section 108(3) of the Housing Grants, Construction and Regeneration Act 1996 is that “once an adjudicator has decided the first dispute, that dispute cannot be referred to adjudication again because it has already been resolved” (Akenhead J in Balfour Beatty Engineering Services (HY) Ltd v Shepherd Construction Ltd [2009] EWHC 2218 (TCC)). Section 9(2) of the statutory scheme which underpins the Act makes it clear that an adjudicator “must resign where the dispute is the same or substantially the same as one which has previously been referred to adjudication”.
If a second adjudicator were to proceed with a second adjudication notwithstanding these provisions, then the adjudicator will have acted in excess of their jurisdiction and the decision will not be enforced, either on that basis or if there is a linked breach of the rules of natural justice. The question of whether either has occurred will be one of fact and degree (Quietfield Ltd v Vascroft Construction Ltd [2006] EWCA Civ 174 (TCC); [2006] PLSCS 268).
M’s approach to the adjudication
M, one of the country’s leading adjudicators, was very alive to these issues. He therefore asked S and G if they wanted him to consider alternative positions – one, where he was bound by the previous adjudicator’s decision, and one where he was not. G did not reply, but S’s solicitors, without agreeing M had formal jurisdiction to do this, acknowledged that it may “assist” if M acted that way.
M issued a decision with two alternative outcomes. In the first, he held that he was bound by the previous adjudicator’s findings in relation to relevant events. In relation to that alternative, where he did not reopen the delay analysis or consider the new evidence from the certification company, he awarded S the further time claimed and just under £1m additional costs. However, when proceeding on the basis that he was not bound by the previous decision, he actually awarded G just under £210,000.
The decision
Waksman J disagreed with M that the issues in both adjudications were the same: “the fact that in both adjudications, the existence or otherwise of those Relevant Events was an issue, is plainly insufficient to mean that in both adjudications, the dispute was the same or substantially so”. The judge noted that the relevant events related to different periods of time, involved new materials and testing (which were not and could not have formed part of the previous one) and the sixth adjudication was part of a much wider dispute as to the true value of the contract works as a whole.
This meant that, in relation to the first alternative, M’s decision was unenforceable. He did have jurisdiction and in failing to consider the issues, he had breached the rules of natural justice.
So, what about the second alternative? S argued that it had not formally accepted that M had jurisdiction, the decision would need to be severed (which was not possible) and the second alternative was obiter and not binding on the parties.
Waksman J gave these arguments short shrift. During the course of the dispute, the parties had accepted M had jurisdiction and the alternative was not obiter (a concept which the judge felt was difficult to apply to adjudicator’s decisions in any event). Nor was there any issue with severing the award because it was clear that there were two different alternatives.
It is a fascinating judgment and I expect M’s approach will be followed by other adjudicators.
Stuart Pemble is a partner at Mills & Reeve
