Keywords: Housing Grants Construction and Regeneration Act 1996, dispute, multiple disputes, characterization of dispute, paragraph 9(2) of the Scheme for Construction Contracts, jurisdiction.

In Holt Insulation Limited v Colt International Limited the issue was the status of the decision of an adjudicator in a second adjudication that related to the same matters that had arisen in the first adjudication.

Holt had subcontracted work at Rugby to Colt and Colt had made applications for payment during the course of the works. When Application 10 was not paid in full, Colt commenced adjudication proceedings. The Referral Notice requested the Adjudicator to decide if Colt was entitled to payment of the sum of £110,586.56 arising from Application 10. During the course of the adjudication Colt invited the Adjudicator to make numerous assessments of value in the alternative. The Adjudicator decided that Colt was not entitled to the full amount claimed of £110,586.56. He also decided that his jurisdiction was limited by the Referral Notice and did not extend to examining alternative valuations. For that reason the Adjudicator found that Colts claim failed.

Colt then started a second adjudication on the sums due under Application 10, but this time requested payment of £97,309.77 and crucially “or alternatively such other sum or sums as the Adjudicator shall decide to be fair and reasonable in the circumstances of the claim”. Holt objected that the Adjudicator did not have jurisdiction in the second adjudication on the grounds that the Scheme for Construction Contracts applied, and paragraph 9(2) required him to resign where the dispute was the same or substantially the same as the one previously referred. The Adjudicator decided that the issue referred to him in the second adjudication was whether Colt was entitled to any other sum than the £110,586.56 previously requested. The Adjudicator decided this was a different dispute and continued. He found that Colt was entitled to £72,939.56.

Colt attempted to enforce the second adjudication decision by winding up proceedings in Scotland, but the status of the second adjudication decision was a major issue. There was considerable delay and Holt applied for a declaration in respect of the adjudication decisions. His Honour Judge Mackay sitting as a High Court judge of the TCC in Liverpool District Registry, ordered payment into court of the sum in dispute following which he heard the application.

Holt argued that that there was no final issue estoppel or “res judicata” arising out if an adjudication decision. The decision has temporary finality only. Paragraph 9(2) is an essential part of ensuring the temporary finality of all adjudication. Holt argued that the second adjudication related to the same subject matter as the first adjudication. It claimed a small reduction as to the figure and various words requesting the adjudicator to award a lower sum if he sees fit, but there were no new claims not included in the previous adjudication. Holt argued that a subcontractor who can claim a large sum and fails, for whatever reason, cannot re-shape his claim very slightly in the light of the decision and claim a smaller sum and seek a second adjudication.

Colt on the other hand argued the case on the basis of the meaning of the word “dispute”. Although the issues may be the same in the two disputes, if the disputes are different disputes arising out of the same building contract or the same set of figures put differently then there are two different disputes. The second adjudication related to a much more flexible claim for valuations on different aspects of the contract. The second decision was based firmly on the issue – what sum was Colt entitled to?

His Honour Judge Mackay concluded that Colt was correct. He referred to decisions in VHE Construction v RBSTB Trust Co Ltd, Sherwood Casson v McKenzie Engineering Limited, and Fast Track Contractors Ltd v Morrison Construction Ltd. The important matter was the precise dispute between the parties. The vital and necessary question to be answered when a jurisdictional challenge is mounted is what was actually referred? That requires a careful characterization of the dispute referred. Judge Mackay considered that whilst the references to the adjudicator may have related to the same matters, arising out of contractual relations between the parties they did not relate to the same dispute. There was nothing similar in the disputes. They were about different things. They may have been about the entitlement to claim in respect of the same work but the notices of referral were crucially different and the adjudicator was correct in reaching the decision that he did.

The decision is the application of the sound principles established by His Honour Judge Thornton QC in the cases of Sherwood and Fastrack. It is important for the Referring Party to decide the issue he wishes to have decided and to draft the Notices of Adjudication accordingly. Clear precise words are necessary. Otherwise instead of obtaining rapid resolution of a dispute, the matter may become a protracted legal argument on jurisdiction.