Building works – Construction contract – Delay – Defendant engaging claimant to carry out construction works – Parties appointing adjudicator to rule on practical completion – Adjudicator awarding liquidated damages – Whether second adjudicator having jurisdiction to decide further issues – Claim dismissed
By a contract incorporating the JCT Standard Form of Contract (With Contractor’s Design) (1998 ed), the defendant employer engaged the claimant contractor to carry out the design and construction of two houses and external works on land in Warwickshire. The date for completion was 29 September 2006. The rate of liquidated damages was £1,500 per week.
The works were delayed and despite an extension of time they were not completed. On 17 August 2007, representatives of the defendant and the claimant signed a pro forma handover document. This stated that, on the final inspection of the property, the works would be accepted as being complete, subject to the specified outstanding defects being dealt with within a reasonable time.
On 3 September 2007, the defendant’s agent notified the claimant in writing that, owing to a particular defect in the floor screed, it was not possible to certify practical completion. The claimant pointed out that that defect had not been identified in the handover form of 17 August, so that practical completion was effective from that date.
On 4 April 2008, the defendant’s solicitor served a notice of adjudication seeking a declaration that practical completion had not occurred at that stage. The adjudicator (first adjudicator) considered the handover form and concluded that practical completion had not taken place either on 17 August or at the date of the adjudication notice. A second adjudication was commenced on the same day concerning the liquidated damages owing to the defendant. The same adjudicator considered that the defendant was entitled to liquidated damages and awarded the sum of £75,428.57, which the claimant paid.
The claimant initiated a third adjudication in which a different adjudicator (second adjudicator) rejected the defendant’s case. The claimant applied to enforce that decision dated, 2 July 2008, in the sum of £79,569.79. The defendant maintained that the second adjudicator had no jurisdiction to reach that decision because the dispute was substantially the same as that in the earlier dispute decided by the first adjudicator.
Held: The claim was dismissed.
In all the circumstances, the adjudicator in the third adjudication did not have jurisdiction to embark upon and decide the issues before him and his award would not be enforced.
The parties were bound by the decision of an adjudicator on a dispute or difference until it was finally determined by court or arbitration proceedings or by a subsequent agreement between them. They could not seek a further decision by an adjudicator if that dispute or difference had already been determined by a previous adjudicator. An adjudicator had to resign where the dispute was the same or substantially the same as one that had previously been referred to and determined by an early adjudication.
The extent to which a decision or a dispute was binding depended upon an analysis of the terms, scope and extent of the dispute or difference referred to adjudication and the decision made by the adjudicator. Whether one dispute was substantially the same as another was a question of fact and degree: HG Construction Ltd v Ashwell Homes (East Anglia) Ltd [2007] EWHC 144 (TCC)l [2007] BLR 175 and Quietfield Ltd v Vascroft Construction Ltd [2006] EWCA Civ 1737; [2007] BLR 67; [2006] PLSCS 268 considered.
Per curiam: Adjudication was intended to be a quick one-off event and not a process by which a series of decisions by different people could be sought every time a new issue or a new way of arguing a case occurred to one or other of the contracting parties. Given the clear result of the dispute regarding practical completion and liquidated damages following the first two adjudications, the claimant ought not to have commenced the third adjudication. If it had been unhappy with the results in those adjudications, it should have challenged the decisions by way of arbitration or in the courts.
Camille Slow (instructed by Wright Hassall LLP, of Leamington Spa) appeared for the claimant; Piers Stansfield (instructed by Else Commercial Solicitors, of Birmingham) appeared for the defendant.
Eileen O’Grady, barrister
