Four Steps in Adjudication   © Daniel Atkinson 2000                   5th March 2000

Adjudication has now developed into a sophisticated and effective method of dispute resolution, because the Courts have filled the gaps in the legislation. It is now time for the legislation to be revisited to iron out the remaining wrinkles. Nonetheless it is possible to identify the four key practical questions to answer before starting adjudication.

Authority: Fastrack Contractors Ltd v Morrison Construction Ltd (4^th Jan 2000) TCC

An adjudicator derives his jurisdiction from his appointment and that appointment is governed by HGCR Act 1996. The Act requires that a dispute must already have arisen between the parties, and the Notice of Adjudication and the Referral Notice must relate to that pre-existing dispute.

A dispute only arises when the issue or claim has been brought to the attention of the other party, and crucially that party has the opportunity of considering and then either admitting, modifying or rejecting the claim or assertion. Simply making a claim and submitting it may not be enough. A claim has to be notified and rejected to be a dispute, but refusing to answer a claim may also be a rejection.

Any selection, acceptance of appointment or subsequent adjudication and decision that is not confined to the pre-existing dispute is undertaken without jurisdiction. It may be that only that part not covered by the pre-existing dispute would invalid. This would depend on the facts and relevant wording of notice of adjudication and referral notice.

Authorities: Sherwood & Casson Ltd v Mackenzie (Nov 1999) TCC

The dispute may cover one, several or many of one, some or all of the claims, heads of claims, issues contentions and causes of actions which are in dispute when the reference is made to adjudication. In other words the "dispute" which may be referred is all or part of whatever is in dispute at that time. Whether this is in fact more than one dispute depends upon the nature of the question being put to the Adjudicator.

3. Is there a limit to the Number of Disputes which can be Referred in One Adjudication?

Authorities: Sherwood & Casson Ltd v Mackenzie (Nov 1999) TCC

His Honour Judge Thornton QC in the first judgment above decided that both HGCR Act 1996 and the Scheme envisage that only one dispute can be referred at any one time. He held that the Scheme in particular envisages that each dispute will be the subject of a different notice and a different appointment of an adjudicator. He developed this further in the second judgment above. He held that if two or more disputes is to be referred, each must be the subject of a separate reference. It would then be for the nominating body to decide whether it was appropriate to appoint the same adjudicator. A referring party must refer a single dispute, albeit that the Scheme allows the disputing parties to agree thereafter to extend the reference to cover "more than one dispute under the same contract" and "related disputes under different contracts". H.H. Judge Thornton suggested that at an appropriate occasion, the court would need to consider whether there is a doctrine analogous to the abuse of process doctrine in court proceedings which requires a referring party to refer all disputed questions to the same adjudicator.

In order to decide whether there is more than one dispute, it is necessary to determine the nature of the question being put to the Adjudicator. So, for example, in the case of payments there are two different questions. One is in the form "What sum is due for a particular interim payment" or "What sum is due for a particular item of work?" or "What sum is due at the Final Account stage?" without any particular sum being included as part of the claim. The other and different question is in the form "Is a particular specified sum due?" How the question is put to the Adjudicator is vital and requires careful consideration.

In the third judgment above His Honour Judge Bowsher QC recognised the practical importance of this matter. He distinguished both the judgments by Judge Thornton as being decisions on contracts to which the Scheme applied. He decided that there was nothing in the HGCR Act 1996 itself which prevented more than one dispute or even more than one contract being included in one referral. Any restriction on the number of contracts, or the number of disputes under one contract, to be referred must be derived from the contract or the Scheme, since there was no such restriction in the Act. Where the Scheme applied only one dispute could be referred unless the parties consented otherwise. A construction contract however could provide for the referral of more than one dispute or more than one contract without the consent of the other party. Judge Bowsher questioned whether this might be unwise but decided that there was no reason why this could not be done.

This is clearly a difficult area that merits legislative intervention. Adjudication can provide rough justice. The possibility can be reduced if the adjudicator is chosen with the appropriate skills for the particular dispute. This requires referrals to be limited to one type of dispute. There are significant differences between disputes on say valuation, interpretation of clauses of the contract and unforeseen ground conditions. Whilst there are difficulties with clearly defining the nature or type of a dispute, this is preferable to an adjudicator being asked to decide within 28 days a myriad of disputes some of which are outside his immediate expertise and require legal and expert assessors to assist him.

4. Has the Dispute already been decided in a previous Adjudication?

Authorities: Sherwood & Casson Ltd v Mackenzie (Nov 1999) TCC

VHE Construction plc v RBSTB Trust Co Ltd (13 Jan 2000)

It is necessary to consider each dispute in the round. For instance, a claim for variations which are required to be remeasured and revalued on the final account is not the same as the claim under the previous interim application. This is particularly so if the variations in the Final Account have to be considered for the first time in the context of loss and expense.

If part of the dispute is a claim which is the same as decided in a previous adjudication, then the second adjudicator should decide that there was no dispute on this part. He should abide by the previous decision. The contractual machinery is superseded by the first adjudicator’s decision which is an independent obligation to comply with his decision. The second adjudicator has no jurisdiction to set aside, revise or vary the first adjudicator’s decision. The Court itself has no appellate jurisdiction with regard to an adjudicator’s decision.

There is no possibility of the Adjudicator resigning from determining part of a dispute referred to him. He must resign from the dispute in its entirety or confirm his appointment in its entirety. The Adjudicator cannot resign from part that has been referred whilst retaining jurisdiction to determine the balance of the reference.

If there are two conflicting decisions, it may be appropriate to set one off against the other in enforcement proceedings, depending on the timing of the decision.