Adjudication
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KEYWORDS: |
Adjudication, Housing Grants, Construction and Regeneration Act 1996, DOM2 1981, previous adjudication decisions, practical completion, extension of time, enforcement of decision, jurisdiction, abuse of process, HH Judge Richard Havery QC. |
On construction projects there are likely to be a number of disputes on the entitlement to extension of time for completion. Contractors will frequently refer the matter to an adjudicator for a rapid decision. It is important that the adjudicator has sufficient evidence and analysis to be able to make a decision and that the alleged delay event is clearly identified.
If a second adjudicator is appointed to consider the entitlement to extension of time, he may have difficulties in deciding the issue without at least examining the facts already placed before the first adjudicator, even if the alleged delay event is different. In that case the second adjudicator's decision may be challenged as unenforceable on the basis that the matter had already been considered by the first adjudicator.
This is the situation which arose in Emcor Drake & Scull Limited v Costain Skanska Joint Venture [2004] EWHC 2439 (TCC) decided on 29 October 2004 by HH Judge Richard Havery QC.
The Costain Skanska Joint Venture ('CSJV') was the main contractor for the refurbishment and alteration of the Great Western Royal Hotel at Paddington. Emcor Drake and Scull ('EDS') was one of the principal sub-contractors and was responsible for the design and installation of the electrical services. The sub-contract was the standard form of sub-contract DOM/2 1981 edition including amendments.
Clause 11.2 of the sub-contract required EDS to give written notice to CSJV whenever it became reasonably apparent that the sub-contract works were subject to delay. Clause 11.3 required CSJV to grant an extension of time if CSJV properly considered that any cause of the delay was an act, omission or default of CSJV or was the occurrence of a Relevant Event as defined in the sub-contract. In fact, CSJV extended the time for completion of the sub-contract works to 23 July 2001. Practical completion took place on 27 February 2002.
In just the situation which occurred where practical completion was after the extended time for completion, Clause 11.7 of the sub-contract required CSJV to do one of three things:
CSJV was required to carry out the review no later than 16 weeks from the date of practical completion which in this case was no later than 19 June 2002. CSJV did none of those things and was thereby in breach of contract.
EDS made three claims for extensions of time under clause 11.7:
On 8 May 2003 EDS referred the November Claim to adjudication. The adjudicator gave his decision on 26 June 2003 and decided that EDS was not entitled to a declaration of entitlement to an extension of time.
On 14 May 2004 EDS referred the February Claim to adjudication. The second adjudicator made his decision on 1st July 2004 and decided that EDS was entitled under clause 11.7 of the sub-contract to an extension of time to 25 February 2002 and to payment of the sum of £201,069.34 plus VAT as applicable.
EDS applied to Judge Havery QC to enforce the decision of the second adjudicator.
CSJV case was that the second adjudicator's decision was made without jurisdiction and/or in excess of jurisdiction and/or that the reference was an abuse of the adjudication process such that his decision should not be enforced. CSJV put forward four arguments.
CSJV's first argument was that the first adjudicator's decision encompassed and decided the issue between the parties as to what extension of time EDS was entitled to under clause 11.7 of DOM/2. Accordingly it was argued the second adjudicator's was void for want of jurisdiction.
Judge Havery observed that the basis of CSJV's submission was that CSJV was empowered under clause 11.7 to grant only one extension of time. The essence of the argument was that there could be only one adjudication on the point.
Judge Havery QC considered the argument involved a non sequitur and rejected it.
It was common ground that an adjudicator must respect the decision on a point decided in an earlier adjudication between the parties. CSJV argued that the second adjudicator had not done so. CSJV argued that in reaching his decision the second adjudicator both considered facts and matters that had been adjudicated upon and reached conclusions in relation to those facts and matters that were contrary to those that had been reached in the first adjudication and by which he was bound. In doing so, the second adjudicator exceeded his jurisdiction. As a result, it was argued, his decision was of no effect and unenforceable.
The only issue referred to the first adjudicator was the matters in relation to the bedrooms and then for events up to 30 November 2001. The only evidence put forward in the first adjudication was evidence relating to the bedrooms: works in the bedrooms, access to the bedrooms, drawings relating to the bedrooms, and so on.
First, it was argued that that the first adjudicator had decided that EDS was responsible for delays that had delayed completion of the works.
Judge Havery found that the first adjudicator did not decide that EDS was not entitled to any extension of time; he decided merely that EDS had not discharged the burden of showing that they were entitled to an extension of time on the ground of critical delay to the bedrooms. He found that the first adjudicator suggested that ESD may have caused delay, but there was no explicit finding to that effect.
The second adjudicator considered that the first adjudicator had decided that ESD had caused delay but he concluded that such delay was not critical.
Judge Havery held that the second adjudicator was entitled to do so since the first adjudicator had not decided whether the bedroom delays were critical.
Second, it was argued that the first adjudicator's decision was a confirmation of the period for completion already fixed as provided under Clause 11.7 and that the second adjudicator was bound by that decision.
Judge Havery held that the first adjudicator simply declined to grant an extension of time on the ground of delay to the bedrooms and that was not a decision constituting a confirmation of the previous period.
Finally, CSJV argued that in carrying out the review required by clause 11.7 and in reaching his decision the second adjudicator necessarily had to, and did, reconsider the facts and matters that had previously been adjudicated upon. The conclusion reached by the second adjudicator relative to those facts and matters was contrary to that reached in the first adjudication. The second adjudicator, accordingly, exceeded his jurisdiction it was argued.
Judge Harvey considered that it might be that the second adjudicator did consider the facts and matters considered by the first adjudicator in reaching his conclusion. He held that that in itself was not objectionable. He held that the second adjudicator was not invited to trespass on the first adjudicator's decision, nor did he do so. Accordingly Judge Havery reject this argument.
CSJ's third ground was that if the second adjudicator had jurisdiction it was only to considering what if any extension of time EDS might be entitled to after 30 November 2001.
Judge Havery observed that the argument was based on the proposition that the first adjudicator had decided that EDS was not entitled to any extension of time up to 30 November 2001. It followed from Judge Havery's previous findings that he therefore rejected that argument too.
Finally, CSJV argued that EDS had included within its notice of referral in the second adjudication facts, matters and documentation (comprising in excess of 4,000 pages of a total of approximately 5,000 pages) relating to, and considered by the first adjudicator.. It was argued that it was unfair and an abuse of the adjudication process to require CSJV to respond to those facts and matters in the second adjudication. It was submitted that the second adjudicator's decision, if otherwise enforceable, ought not to be enforced for that reason.
Judge Havery held that the necessity to respond quickly to vast quantities of paperwork was one of the well-known hazards of the the adjudication process. That could not of itself be a good ground for contending that there had been an abuse of process.
Judge Havery considered that the fact that the same documentation appeared in two successive adjudications was a wholly insufficient ground for describing what happened as an abuse of process.
Judge Havery concluded that the decision of the second adjudicator was enforceable.
It is not clear what Judge Havery meant by his judgment on the first argument. It appears that Judge Havery QC simply rejected the argument that there could only be one adjudication on the matter of extension of time. If that is the basis of the judgment then it allows a party to refer different alleged delay events to successive adjudications.
It is suggested that this does not mean that subsequent adjudicators can determine the effect on completion of the same alleged delay events, a point that appears in the part of the judgment dealing with the second argument. That argument was premised on the common ground that an adjudicator must respect the decision on a point decided in an earlier adjudication between the parties.
It is suggested that this is an issue of fact and it is necessary to establish what was decided by the first adjudicator. That was the issue in deciding the second argument and shows how important it is for adjudicators to state precisely what it is they are deciding with reasons.