Adjudication
F W Cook v Shimizu (2000) TCC

© Daniel Atkinson 2000    27 December 2000

In F W Cook Limited v Shimizu (UK)Limited (2000) TCC the issue was what were the disputes referred to the Adjudicator and whether he had exceeded his jurisdiction. This in turn required the Court to interpret the Adjudicator’s decision.

The subcontract was for mechanical works at the Telehouse 2000 building in the London Docklands. Although no formal subcontract was executed, it was accepted that it incorporated DOM/2. Disputes arose, but before the dispute was referred to adjudication, payments on account were made so that the dispute arose out of discussions about Cook’s final account. On 15^th October 1999 the managing director of Cook gave a notice of intention to seek adjudication in the form of a letter. It was held that the letter had to be read in the sense in which it was received by Shimizu, to put onself in the position of the parties at the time and adopt as far as one can a commonsense approach. It was not right to read letters of the kind in the instant case minutely, to pore over individual words, to milk a particular noun or verb and to try to give it a legalistic effect.

Using this approach, His Honour Judge Humphrey Lloyd QC concluded that the letter referred only some matters described in the letter to adjudication, but left others to be resolved by the parties once the adjudicator’s decision was given. Recourse to adjudication was intended to advance the process of agreement of the final account. The notice did not seek to obtain a decision as to how much the next interim payment should be.

In his decision, the adjudicator dealt with a number of issues but did not total up the figures in any way but concluded by directing "all sums payable pursuant to this decision shall be paid by the respondent to the referring party within seven days of the date hereof..". Shimizu read the decision as indicating that the Adjudicator had decided that some of the items which were being disputed were to be treated in a particular way in the overall final account then under negotiation between the parties. Accordingly it made a further payment of £22,246.26. On the other hand, Cook read the decision as entitling it to a payment of over £200,000, treating the word "payable" as meaning that they were to be paid in full.

Judge Humphrey Lloyd agreed with Shimizu’s interpretation. It was held that the adjudicator was well aware that the dispute was about the final valuation and not about a particular amount due for interim payment. The sums stated to be "payable" were payable pursuant not just to the decision but pursuant to the subcontract. In other words the "sums payable pursuant to this decision.." meant payable pursuant to the subcontract. The decision was intended to implement the subcontract between the parties. The decision was tantamount to a direction to the parties as to certain ingredients of the next valuation and that Shimizu was to give effect to them.