Adjudication
Grovedeck Ltd v Capital Demolition Ltd (2000) TCC

© Daniel Atkinson 2000     5 March 2000

The decision in Grovedeck Limited v Capital Demolition Limited (24 February 2000) TCC deals with two issues : the requirement for the agreement to be in writing and whether more than one dispute can be referred to adjudication and in particular disputes under more than one contract.

Grovedeck were subcontractors who applied for enforcement by summary judgment of an adjudicator’s decision awarding them payment.

The contracts were made orally. Capital argued that the adjudicator acted without jurisdiction since there was no contract in writing and that the HGCR Act 1996 did not apply.

Grovedeck relied on Section 107(5) of the Act. Section 107(5) provides that where an allegation is made by one party in written submissions in adjudication proceedings or in arbitral or legal proceedings, which is not denied by the other party in its response, then that exchange constitutes an agreement in writing under the Act. Grovedeck relied on the exchange of written submissions in the adjudication itself. There had been no denial that there were oral agreements in the two projects and this was enough to give the adjudicator jurisdiction Grovedeck claimed.

It was held that the contracts were not subject to any terms of adjudication when the adjudicator was appointed. The contracts made no such provision and the Act did not apply. At that point the Adjudicator did not have jurisdiction. Capital challenged and denied the jurisdiction of the adjudicator in every communication after the Adjudicator’s appointment. The question was therefore how the adjudicator could be given jurisdiction after an unlawful appointment.

His Honour Judge Bowsher QC examined Hansard to determine the intention of Parliament. He held that there was no intention that submissions made by a party to an unauthorised adjudication should give to the supposed adjudicator a jurisdiction which he did not have when he was appointed. He also held that the denial in Section 107(5) of the Act refers to the denial of the terms of the agreement. Disputes as to the terms, express or implied, of oral construction agreements were common and therefore not susceptible of resolution by a summary procedure such as adjudication. It is only when the room for dispute is removed by previous formal and binding legal submissions that the adjudicator has jurisdiction. Accordingly it was held that the Adjudicator did not have jurisdiction and the court declined to enforce the decision.

Capital had a second line of defence which Judge Bowsher considered of practical importance. Capital argued that the Referral Notice was bad because it referred to two contracts and not one. Grovedeck on the other hand relied on the Interpretation Act 1978, that unless there was a contrary intention words in the singular included words in the plural in the HGCR Act 1996. This applied to the term "dispute" and "contract" in HGCR Act 1996.

It was held that there was nothing in the Act to show a contrary intention. Judge Bowsher held that there was nothing to prevent more than one contract being included in one referral. If there is to be any restriction on the number of contracts, or the number of disputes under one contract, to be referred, then this must derive from either the contract or the Scheme. There was no such limitation under the Act.

This is difficult to accept. The references in the Act at Section 108 are to "the Contract". Since terms relating to adjudication are implied where the contract does not comply with the Act, it is difficult to agree with the respected judge that the references to the contract in the singular include the plural. The intention is less clear certainly in relation to the number of disputes. It is suggested that a practical approach would lead to a restriction on the number of disputes that can be referred to an adjudicator at one time. This will allow the nominating bodies to choose the person with the appropriate skill for the dispute whether legal or technical. In this regard the interpretation to the contrary by His Honour Judge Thornton QC in Fastrack Construction v Morrison Construction and in Sherwood v McKenzie is to be preferred. All three decisions are obiter in any event in relation to the interpretation of the Act, since in each case the Scheme applied, and of equal authority it is suggested.

Having decided the meaning of the Act, His Honour Judge Bowsher then examined the Scheme since that would have applied if the Act applied. He agreed with Judge Thornton that only one dispute could be referred at any one time under the Scheme unless the parties agreed otherwise. In the present case Grovedeck had no right to refer more than one dispute or more than one contract. This was another ground for refusing to enforce the adjudicator’s decision.