Parties referring building dispute to architect pursuant to contract — Claimant referring related issue to adjudication — Whether adjudicator exceeding his jurisdiction in settling dispute referred to architect — Claim dismissed
The claimant construction company undertook building works for the defendant by way of a standard building contract. This provided that any dispute could be referred to adjudication and that issues relating to the claimant’s entitlement to extensions of time could be referred to the architect.
After an issue arose as to an extension of time, the defendant withheld the payment of liquidated and ascertained damages, and the matter was referred to the architect. Within the time allowed for the architect to make his decision, the claimant issued a notice of referral to adjudication to determine whether practical completion had been achieved.
With regard to the issue of the time extension, the adjudicator found in favour of the claimant and ordered payment of the damages. The defendant accepted that part of the adjudicator’s award that was favourable to it, but refused to pay damages. The claimant applied for summary judgment.
Three questions fell to be decided, namely whether: (i) the adjudicator had exceeded his jurisdiction in determining the question of the time extension and ordering the release of the damages; (ii) the defendant was estopped from raising the jurisdiction point at this stage, since it had failed to raise the matter earlier in the proceedings; and (iii) the doctrine of approbation and reprobation prevented the defendant from accepting any part of the adjudicator’s award.
Held: The claim was dismissed.
1. Under a standard building contract, any number of disparate disputes could be referred to adjudication in one notice, but a matter entrusted to an independent third party for resolution that remained undecided was not a matter in dispute, and was therefore not referable. Since the issue of the time extension had been referred to the appropriate authority and was still being considered, it was inappropriate for that same issue to be determined by a different authority. The adjudicator had been in error in finding for the claimant on that matter, and he did not have the authority to order the release of the withheld liquidated damages.
2. If a tribunal had been accused of exceeding its jurisdiction and the response was that it was too late to contend that point, the issue became one of waiver rather than estoppel. Unless a party had been aware of the jurisdiction point and had deliberately not raised it, that party was entitled later to rely upon the point that an adjudicator had decided something not referred to him or not in dispute at the time of the referral. In the instant case, the defendant could not have appreciated that its failure to raise the question of jurisdiction earlier would have been treated as a waiver of the right to do so later.
3. In order for the doctrine of approbation and reprobation to apply, it was necessary for a party to take the benefit of a decision in the full knowledge that it was open to it to object to that decision. In the instant case, although the defendant had derived benefits from the adjudicator’s ruling on some of the matters in dispute, those matters were not among those in which the adjudicator’s jurisdiction had been challenged. The doctrine of approbation and reprobation therefore had no application.
Martin Bowdery QC (instructed by Berrymans Lace Mawer) appeared for the claimant; Adrian Williamson QC (instructed by Masons) appeared for the defendant.
Vivienne Lane, barrister
