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.
Main Facts
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:
- either further extend the time for
completion on the above grounds; or
- shorten the
time for completion in the event of the issue of a variation order omitting
work - issued after the last revision of
time had been made; or
- confirm
the completion date previously fixed.
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:
- The November Claim. In November 2002 EDS submitted
a claim for extension of time to 30 November 2001 on the ground that its
works to the bedrooms had been delayed to that date.
- The
April Claim. On 16 April 2003 EDS submitted a claim for
extension of time to 27 February 2002. The claim subsumed the
November claim and sought to rely on additional events giving rise to
critical delay.
- The February Claim. On
11 February 2004 EDS submitted a claim which relied upon events and material comprised
in the November and April claims.
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.
Main Arguments
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.
Argument 1 - One
Adjudication Only
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.
Argument 2 - Contrary
Decisions
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.
Argument 3 - Only Events After 30 November 2001
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.
Argument 4 - Excessive Documentation - Abuse of Process
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.
Judgment
Judge Havery concluded that the decision of the second adjudicator was enforceable. Commentary
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.
| 