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RECENT ADJUDICATION CASES –
PART 11
By
Roger Knowles
INDEX
1.0 Breach of Natural Justice
1.1 Ardmore Construction Ltd v Taylor Woodrow Ltd (2006)
1.2 Keir Regional Ltd (trading as Wallis) v City and General
(Holborn) Ltd (2006)
2.0 Enforcement of Post Adjudication Agreement
Baris Ltd v Kajima Construction Europe (UK) Ltd (2006)
3.0 Side Agreement
L Brown and Sons v Crosby North West Homes (2005)
4.0 Adjudicator Uses His Own Expertise
Ramkor and Perco v Igoe (2006)
5.0 When Does a Dispute Arise
Orange EBS Ltd v ABV Ltd (2003)
6.0 Dealing With a Successful Party’s Likely Inability to Repay
Ajudicator’s Decision in Subsequent Proceedings
Wimbledon Construction Company Ltd v Derek Vargo (2005)
7.0 Enforcement of Adjudicator’s Decision
Harlow and Milner Ltd v Teasdale (2006)
8.0 Contracts in Writing
Trustees of the Stratfield Saye Estates v AHL Construction Ltd
(2004)
9.0 Introducing a New Claim Into The Adjudication Process
William Verry (Glazing Systems Ltd v Furlough Homes Ltd
(2005)
10.0 Adjudicator’s Decision and Set Off
10.1Balfour Beatty Construction v Serco Ltd (2005)
10.2 Geris v Handelsgesellschaft GmbH v Les Constructions
Industrielles de Mediterrannee SA (2005)
ADJUDICATION CASES PART 11
1.0 Breach of Natural Justice
1.1 Ardmore Construction Ltd v Taylor Woodrow Ltd (2006)
A fairly well developed strategy for avoiding an unwelcome adjudicator’s
decision is to allege that there has been a breach of natural justice. Basically
natural justice is served if it is clear as to the case each party has to answer
and an opportunity has been provided for them to be heard. A number of
challenges have been made to decisions of adjudicators on the grounds that
the manner in which the adjudicator has conducted the proceedings resulted
in a breach of the rules of natural justice. The present case involved work at
Glasgow Harbour. Ardmore entered into a subcontract with Taylor Woodrow
to carry out groundworks, concrete works and drainage works. Ardmore
submitted an interim application for payment which among other matters
included a claim for overtime working. A dispute arose and the matter was
referred to an adjudicator who found in favour of Ardmore including the
overtime working. This decision was based upon the fact that there had been
verbal instructions given by Taylor Woodrow or acquiescence on their part.
Taylor Woodrow refused to comply with the adjudicator’s decision on the
grounds that there had been a breach of natural justice and as a result
enforcement proceedings were commenced by Ardmore. The claim for
overtime working was based upon the interpretation of a letter dated 2 nd July
2003. Nothing in the written material put before the adjudicator gave notice of
an argument that there had been verbal instructions given or acquiescence. It
was alleged by Ardmore that whilst there was no reference in the written
submissions representations had been made concerning these matters at the
hearing. This was disputed by Taylor Woodrow who argued that the
adjudicator’s decision had been based upon arguments which had not been
raised or discussed before him and for which they had received no notice.
It was held by the Outer House of the Court of Sessions in Scotland that the
adjudicator had failed to observe the basic rules of natural justice and had
behaved in a manner which on an objective basis involved a disregard of fair
play. That part of the decision relating to the overtime working was not
enforced but Taylor Woodrow were obliged to pay the remainder.
1.2 Kier Regional Ltd (trading as Wallis) v City and General (Holborn)
Ltd (2006)
This is another case where the court had to decide whether an adjudicator’s
decision had been arrived at involving a breach of the rules of natural justice.
The question to be answered by the court was whether new information could
be introduced by one of the parties after the
adjudication proceedings had commenced. Wallis entered into a contract for
the refurbishment and rebuilding of premises which formerly were the Patent
Office Library. Disputes arose between the parties some of which were
referred to adjudication. One referral involved a claim for an extension of time.
An extension of time had been granted under the contract for 28 weeks and
the adjudicator in his decision awarded a further 30 weeks. Wallis then
evaluated the loss and expense associated with the delay which totalled
£1,330,012 and made an application for certification and payment. A sum of
£527,192 was certified by the contract administrator which did not meet with
the approval of Wallis who instigated a further referral to adjudication. Two
expert’s reports were submitted as part of the City and General’s defence.
However as these reports had not been seen prior to the referral by Wallis it
was argued that the adjudicator had no jurisdiction to take them into account.
The adjudicator decided that as the experts reports were new evidence not
available to the parties at the time the dispute crystallised they were not to be
taken into account. Further due to the short time scale involved in adjudication
there was insufficient time available for Wallis to properly consider the reports
which is sometimes referred to as defence by ambush. His decision was that
Wallis was entitled to an additional payment of £719,295. City and General
refused to pay and enforcement proceedings were commenced. City and
General argued that the adjudicator’s refusal to consider the expert’s reports
was manifestly unfair and amounted to one of the plainest cases of a breach
of natural justice. The court was not fully convinced but concluded that it was
not necessary to make a decision on the point as if the adjudicator was wrong
it amounted to an error in law which was not sufficient to invalidate the
adjudicator’s decision.
This type of case makes it difficult to differentiate between a breach of natural
justice which invalidates an adjudicator’s decision and an error of law which
does not.
2.0 Enforcement of Post Adjudication Agreement
Baris Ltd v Kajima Construction Europe (UK) Ltd (2006)
It is unusual for the parties where a dispute has been the subject of an
adjudicator’s decision, which has been resisted by one of the parties, to arrive
at a compromise agreement. However this was what happened in this case.
Baris was a subcontractor to Kajima to construct dry wall partitioning on a
Health and Safety Executive building in Bootle. A dispute arose which was
referred to adjudication where a decision was made on 1st December 2005
that Kajima should pay Baris the sum of £181,895 plus interest. This decision
was not to the liking of Kajima who refused to make payment. On the 13th
December 2005 Baris made a pre-action offer to settle by fax headed “without
prejudice save as to costs” in accordance with CPR 36. The wording of the
offer was:
“Baris Ltd hereby offer to fully and finally settle their rights given by the
adjudicator if Kajima Construction Europe (UK) Ltd pay the total sum in the
decision namely £181,893.65 only within 21 days of this letter i.e. 3rd January
2006 plus the costs to be taxed if not agreed on a simple basis incurred by
Baris Ltd in issuing and serving proceedings in the High Court.”
The difference between the adjudicator’s decision and the compromise
agreement seems to be limited to the matter of interest only. However Kajima
replied on 14 December 2005
“We acknowledge receipt of your letter dated 13th December 2005 and
confirm that funds will be in your account on or before 3 rd January 2006”
Rather strangely on 19th December 2005 after the exchange of letters but
before payment, Baris commenced proceedings in Court to enforce the
adjudicator’s decision including interest and costs. No reference was made by
Baris to the compromise agreement. Kajima must have been more than a little
non plussed and submitted a defence to the effect that a compromise
agreement was in existence which stood in the place of the adjudicator’s
decision. Baris argued that as the compromise did not constitute a binding
agreement and in any event as it was headed without prejudice it could not be
used in evidence.
The court held that normally a document headed without prejudice cannot be
used in evidence. However if an offer embodied in a without prejudice letter
has been accepted, so that there is a binding compromise between the
parties, then the without prejudice tag falls away and the letter can be used. It
was considered that to deny the court a sight of the offer letter would be
absurd and would effectively deprive Kajima of the opportunity of raising the
compromise point as a defence to the claim. On the matter of whether or not
the exchange of correspondence constituted a binding agreement it was
argued by Baris that there was no binding agreement because Kajima had not
agreed or paid any interest and had not agreed upon any liability as to their
costs. This was dismissed by the court as there was a binding compromise
between the parties as a result of the exchange of faxes.
3.0 Side Agreement
L Brown and Sons v Crosby North West Homes (2005)
A contract was entered into between the parties using JCT 1998 With
Contractor’s Design. Clause 39A was amended to provide for any dispute
“arsing under out of or in connection with the contract “
to be referred to adjudication. There was also a side agreement to the effect
that the claimant was entitled to claim payment of a bonus which would not
be reduced by any entitlement the respondent might have to deduct
liquidated damages. Despite the side agreement the respondent sought to
deduct liquidated damages. The matter was referred to adjudication but it was
argued by the respondent that the side agreement was not governed by the
adjudication provisions in clause 39A as the dispute did not arise under the
contract. The side agreement did not contain a separate right of adjudication.
It was held that it is not uncommon for parties to a construction contract to
enter into side agreements which varied the terms of the contract without
themselves having their own dispute resolution clause. The parties under the
circumstances must have intended that the original contract dispute resolution
provisions would apply. The adjudication provisions therefore applied to the
side agreement.
4.0 Adjudicator Uses His Own Expertise
Dr Rankillor and Perco v Igoe (2006)
There have been a few cases which have dealt with an adjudicator using his
own expertise when arriving at a decision. In the Balfour Beatty v London
Borough of Lambeth case the judge said that where an adjudicator intends to
use his own expertise he should put his initial thoughts to the parties for
comment before employing them in the final decision making process. If the
adjudicator failed to follow this procedure then it would amount to him or her
making out the case on behalf of one of the parties and hence a breach of
natural justice. In the present case a dispute arose between a contractor and
subcontractor in relation to augur boring work. In the final analysis it came
down to an interpretation of laboratory test results concerning the condition of
the soil. The subcontractor Perco who undertook the augur work claimed that
additional cost had been incurred as a result of unforeseen difficult ground
conditions. Both parties submitted their interpretation of the laboratory test
results to the adjudicator. He seemed to disagree with the relative
interpretations and substituted his own experience and expertise. His
conclusion was that the machine chosen was not capable of undertaking the
work and had there been a proper site investigation undertaken the conditions
which were encountered could have been foreseen. The adjudicator in his
decision concluded that Perco were entitled to be paid extra.
The adjudication rules were those of the ICE which expressly allowed the
adjudicator to use his own expertise and experience when making a decision.
In arriving at his decision the adjudicator did not give any advance warning of
the findings he intended to make which did not allow Igoe an opportunity of
responding to the adjudicator’s views about the soil conditions. It was argued
by Igoe that this amounted to a breach of natural justice. It has been held in
the case Carillion v Devonport Dockyard (2005) that the adjudicator was not
required to put his provisional views to the parties in every case. It all comes
down to what the court decides is fair.
It is not unreasonable however when the adjudicator rules state that the
adjudicator can use his own experience and expertise if he or she does just
that.
5.0 When Does a Dispute Arise?
Orange EBS Ltd v ABV Ltd (2003)
Reference to adjudication cannot commence until there is a dispute between
the parties. It is not uncommon once a referral has been made for one of the
parties to argue that the adjudicator has no jurisdiction on the basis that no
dispute has crystalllised. What constitutes a dispute has been the subject of a
number of cases and judges have been eloquent in providing definitions.
Examples are
Fastrack Contractors v Morrison Construction (2000)
In this case judge Thornton made the following observation:
“A dispute can only arise once the subject matter of a claim issue or other
matter has been brought to the attention of the opposing party and that party
has had an opportunity of considering and admitting modifying or rejecting the
claim or assertion”
Sindall v Solland (2001)
Judge Humphrey Lloyd provided the following definition in this case:
“For there to be a dispute for the purposes of exercising the statutory right of
adjudication it must be clear that a point has emerged from the process of
discussion or negotiation … and that there is something that must be decided”
Edmund Nuttall v RG Carter (2002)
Judge Seymour’s view expressed in this case is:
“For there to be a dispute there must have been an opportunity for the
protagonists each to consider the position adopted by the other and to
formulate arguments of a reasoned kind”
The present case again involved the question as to whether a dispute had
arisen which could be referred to adjudication. Orange was a subcontractor to
ABB for M and E work at John Radcliffe Hospital Oxford employing a DOM/1
form of contract. Orange submitted a penultimate application for payment in
the sum of £81,339 when 75% of work had been completed. ABB responded
stating that Orange had failed to complete the work and refused them further
access to the site. On 6th July 2002 ABB wrote to Orange informing them that
the employer would not readmit them to the site as they had abandoned the
works. ABB advised Orange that some of their work was defective and
requested the submission of a final account. Orange denied that they had
abandoned the works or that any of their work was defective. A
comprehensive final account was delivered by Orange to ABB on or about 2 nd
December 2002. ABB advised Orange that they would need until 20 th January
2003 to review the final account. On 6th January 2003 ABB served a notice of
adjudication. ABB claimed that there was no dispute as they needed until 20 th
January 2003 to review the final account. An adjudicator was appointed and
found in favour of Orange in the sum of £90,283 which ABB refused to pay on
the grounds that as there was no dispute the adjudicator had no jurisdiction.
The court considered from early December 2002 until 6 th January 2003 gave
ABB sufficient time for the evaluation and negotiation of the final account,
despite the holiday period. It was unfair that a company should be denied
substantial sums of money because of the intervention of a holiday period. By
the 6th January 2003 the process of negotiation and discussion should have
come to an end and therefore a dispute had arisen.
6.0
Dealing With a Successful Party’s Likely Inability to Repay
Adjudicator’s Decision in Subsequent Proceedings
Wimbledon Construction Company Ltd v Derek Vargo (2005)
The likelihood of a successful party to an adjudicator’s decision being unable
to repay a sum awarded in subsequent proceedings has arisen in a few
enforcement proceedings. In the case of Bouygues v Dahl Jenson the court
refused to enforce an adjudicator’s decision on the grounds that Dahl Jenson
was in liquidation. A similar decision was given in the case of Rainford House
v Cadogan due to there being a strong prima facie case that the claimant was
insolvent. There are however examples of the court enforcing the decision of
an adjudicator even though the party seeking to enforce the decision was in a
financially weak position and there was a likelihood that in the event of a
reversal of the decision in subsequent proceedings the money would not be
forthcoming. Examples of this type of case are:

Absolute Rentals v Glencor

Henshall Engineering v Breen Properties

Total M and E Services v ABB

All-in-One Building v Makers UK
In the present case Wimbledon had carried out construction work to Vago’s
house in south west London and disputes arose concerning the value of the
works. An adjudication took place and the adjudicator in his decision ordered
Vago to pay Wimbledon the sum of circa £120,000. About the same time
Vago commenced arbitration proceedings against Wimbledon. Enforcement
proceedings were instigated by Wimbledon for the payment of the
adjudicator’s decision. Due to Wimbledon’s uncertain financial position Vago
offered to pay the £120,000 into court pending the outcome of the arbitration.
In considering the above cases the judge considered that each case must be
judged on its own facts. He then set out the following principles which should
be used as a guide to deciding whether or not an adjudicator’s decision ought
to be enforced.
1. Adjudication is a quick and inexpensive method of arriving at a temporary
result
2. Adjudicator’s decisions are intended to be enforced summarily and the
successful party should not be kept out of his money
3. The probable inability of the successful party to repay the sum awarded
may constitute “special circumstances” rendering it appropriate
to stay the enforcement proceedings
4. If there is no dispute that the successful party is insolvent then the decision
will not be enforced
5. Even if the successful party’s financial position suggests that it is probable
that it would be unable to repay the amount of the judgement,
payment will none the less be enforced if:
o The financial position is similar to what it was at the time the
contract was made
o The financial position is due to the losing party’s failure to pay
money awarded by the adjudicator
The judge decided to enforce the adjudicator’s decision even though it
unlikely that any repayment could be made for the following reasons:
1. The judge was impressed that the directors of Wimbledon had made loans
to the company demonstrating a high degree of practical faith
in the future of the business
2. Wimbledon’s financial position was no different than it had been when the
contract had been entered into
3. Wimbledon’s financial position appeared to be a direct result of Vago’s
failure to pay the amount of the adjudicator’s decision.
7.0 Enforcement of Adjudicator’s Decision
Harlow and Milner Ltd v Teasdale (2006)
It has been well established since statutory adjudication came into force in
1998, with such decisions as Macob Civil Engineering Ltd v Morrison
Construction (1999), that the most appropriate method of enforcing an
adjudicator’s decision is by way of an application to the court for summary
judgement. In the present case Harlow and Milner undertook work for Linda
Teasdale on property in Leeds employing a JCT Minor Works form of
contract. A dispute arose and the matter was referred to adjudication where
the adjudicator found in favour of Harlow and Milner in the sum of £90,194
including interest. Mrs Teasdale refused to pay up and Harlow and Milner
were left to enforce the decision. Instead of applying to the court for summary
judgement they chose to serve a statutory notice on Mrs Teasdale and pursue
bankruptcy proceedings. Harlow and Milner or their advisers realised they had
made an error and applied to have the statutory demand set aside. They then
set in motion the normal method of enforcement. Mrs Teasdale argued that
the adjudication was unfair because it was quick and that in any event the
work was defective. She also expressed a concern that if she won a
subsequent court case which overturned the adjudicator’s decision Harlow
and Milner would be unable to repay her. The court dismissed all Mrs
Teasdale’s arguments. The procedure was in accordance with the
Construction Act and meant to be quick. If the work was defective the matter
should have been raised in the adjudication proceedings. Finally the risk of
the successful party being unable to repay the sum included in an
adjudicator’s decision is not a good defence to an application for enforcement.
The court ordered that she should pay the amount of the adjudicator’s
decision plus additional interest. With regard to the costs of the bankruptcy
proceedings the court held that each party should bear its own costs. This
seemed a little unfair on Mrs Teasdale as Harlow and Milner had wrongly
commenced the proceedings and then abandoned them. However Mrs
Teasdale had not helped herself in being rather tardy in her response to the
bankruptcy proceedings and this is why the court decided that each party
should bear its own costs.
8.0 Contracts in Writing
Trustees of the Stratfield Saye Estate v AHL Construction Ltd (2004)
For statutory adjudication to be applicable The Construction Act requires
construction contracts to be in writing, or evidenced in writing. There have
been a number of cases which deal with this matter, the most publicised being
RJT Consulting Engineers v DM Engineering (NI)
(2002). In the present case, which dealt with the same subject matter, the
works comprised the restoration of a derelict house. Phase I of the works, as
shown on drawings, involved making the building wind and watertight.
Discussions took place between representatives of the two parties at which
agreement was reached concerning relevant matters relating to the contract,
but no formal contract was entered into. However a representative of Stratfield
wrote to AHL confirming their appointment and stating that payment for the
work was to be on a cost plus basis at rates which had been agreed for
various trades people. One week after work had commenced Stratfield
cancelled the project. Two adjudications were commenced the first of which
did not proceed because the dispute had not crystallise. A second dispute
concerned the value of work carried out prior to the cancellation for which an
adjudicator’s decision was given and paid by Stratfield. Finally adjudication
was commenced relating to compensation for the cancellation in respect of
which AHL claimed a sum of £132,000. The adjudicator found in favour of
AHL in the sum of £75,413 but Stratfield refused to make payment. Stratfield
applied to the court for a declaration that there was no construction contract in
writing.
It was held by the court that there was a contract in writing for the following
reasons:
1. The scope of the works could be found on the drawings and in the
minutes of site meetings.
2. The express terms of the contract were recorded in writing on the
drawings, the minutes and correspondence, these being the works, the
price, the basis for payment and the rates. Hence the agreement was
evidenced in writing
3. Whilst there was no programme and agreed date for completion of the
works neither was necessary for the contract to come into being. It
must have been implied that the work was to be completed in a
reasonable time.
4. In making submissions in the first two adjudications Stratfield had
accepted that the contract was governed by the Construction Act.
In arriving at a decision that there was a contract in existence the court took
into account the following principles established in the RJT Consulting
Engineers case:
1. An agreement is only evidenced in writing for the purposes of the
Construction Act if all the express terms are recorded in writing
2. It is not sufficient to show that all the terms which are material to the
issues which form the dispute have been recorded in writing.
9.0 Introducing A New Claim Into the Adjudication Process
William Verry (Glazing Systems Ltd v Furlough Homes Ltd (2005)
The question as to whether a party to adjudication is entitled to introduce into
the proceedings a new claim which falls outside the disputed matters included
in the referral has been a hot topic for some time. In the case of Edmund
Nuttall Ltd v R G Carter Ltd (2002) Nuttall a subcontractor submitted to the
main contractor Carter a claim for prolongation, delay and disruption in the
sum of £1,979,752 in May 2001 which was rejected by Carter. The claim was
unresolved and a notice of referral to adjudication dated 14th December 2001
was submitted by Nuttall. The referral notice was accompanied by a report
prepared by Anthony Caletka which set out a claim for an extension of time of
235days. Prior to the referral Carter had not seem this report. The adjudicator
found in favour of Nuttall in the sum of £834,468 which Carter refused to pay.
Nuttall sought enforcement of the sum by the court which was resisted by
Carter. It was argued that the dispute which had been referred to adjudication
related to the claim submitted by Nuttall in May 2001 and as the report
prepared by Anthony Caletka was first submitted with the referral notice it was
not the subject of the dispute. The court agreed with this reasoning and
refused to enforce the adjudicator’s decision.
In the present case Verry was employed by Furlough to undertake curtain
walling, cladding and associated works. Delays occurred and Furlough
granted extensions of time until 2nd February 2004. On 2nd July 2004 Verry
submitted a claim for an extension of time until 24th June 2004 together with
its final account. The accompanying letter specifically indicated that it did not
take into account any delays relating to ongoing work. Furlough disputed that
an entitlement to more money existed and argued that Verry had in fact been
overpaid.
Furlough referred the dispute to adjudication including the entirety of the
dispute concerning the final account which included issues about variations,
extensions of time, loss and expense and liquidated damages. The referral
was in broad terms asking the adjudicator to decide whether or not the
extension of time granted by Furlough was correct. Verry in its response
sought an extension of time to 31st July 2004 which was well beyond the 24th
June 2004 the date in the earlier request. This involved Furlough in putting in
a response to a claim which they had not previously seen. However the
adjudicator found in favour of Verry which was resisted by Furlough. The court
also found in favour of Verry. It was held that the response submitted by Verry
was not a new claim and contained material to which the adjudicator was
entitled to have regard in any event. Even if a new claim was involved the
referral notice was framed in such broad terms as to include the late
extension of time claim.
When these two cases are read together it is difficult to conclude that both
courts were adopting the same principles. It seems to come down to a lack of
consistency as to the definition of what is meant by dispute. Whether a
submission made at the time of the referral notice or later is classed as a new
claim and not admissible will depend upon the openness of the wording in the
notice. In the Verry case the judge referred to an open adjudication where the
matters to be referred to adjudication are provided in broad terms. This is to
be compared with a closed adjudication where the mattes to be referred are
written in a very restrictive way.
10.0 Adjudicator’s Decision and Se Off
10.1 Balfour Beatty Construction v Serco Ltd (2005)
It has been well established that once an adjudicator has made a decision
relating to a dispute submitted in a referral notice there is no facility for the
losing party to reduce the effect of the decision by setting off money owed by
the successful party. There have been a number of attempts to overcome the
difficulties this presents to the losing party and the present case is an
example. Balfour Beatty was engaged by Serco to provide variable message
signs on motorways. A dispute arose relating to an entitlement to an
extension of time and financial entitlement. The matter was referred to
adjudication and the adjudicator found in favour of Balfour Beatty whereby an
entitlement to an extension of time to 7th June 2004 and a payment of
£620,664 became due. The adjudicator was not asked to decide whether
there was an entitlement to any extension of time beyond this date although
claims had been submitted in this respect for the periods of time after this
date. Serco declined to pay the amount of the adjudicator’s decision arguing
that it had a setoff for liquidated damages for delay in respect of the period of
time after 7th June 2004 when work was still ongoing. It was also argued that
Serco’s entitlement to liquidated damages arose as a matter of course from
the adjudicator’s decision. It was held by the court that the entitlement to any
extension of time after 7th June had still to be determined and therefore there
could be no entitlement at this stage to the deduction of liquidated damages.
The matter of an entitlement to liquidated damages had not been included in
the referral and therefore was not a part of the adjudicator’s decision.
10.2
Geris Handelsgesellschaft GmbH
Industrielles de Mediterrannee SA (2005)
v
Les
Constructions
In this case the matter of set off also became a key factor on which the court
had to give a decision. In doing so the court arrived at a different conclusion
from what had been decided in the Balfour Beatty case. The claimant Geris
was a subcontractor to CNIM the subcontract being the I.Chem.E. Model
Form for Process Plant. Prior to completion CNIM terminated the subcontract
on the grounds that Geris had failed to proceed regularly and diligently with
the works. By way of response Geris argued the CNIM had repudiated the
contract and claimed for payment in respect of the work they had undertaken,
loss and damage together with an extension of time. The matter was referred
to adjudication but unfortunately the adjudicator’s decision was far from being
a model of clarity. The decision provided for the following:





The gross value of Geris’ work was £334,889
The termination by CNIM was lawful
CNIM has an entitlement to back charges which were allowed
provisionally pending the receipt of more details
Geris’ claim was reduced from £ 154,540 to £8,100
No decision was made concerning the extension of time entitlement as
the dispute had not crystallised
The decision listed the rights of the parties but did not indicate that a sum of
money should be paid. Geris applied to the court to enforce payment of
£341,176 being roughly the value of work and claim as evaluated by the
adjudicator.
The judge in making up his mind had to decide what the adjudicator meant.
He considered that CNIM had an immediate right to set off the amount of its
back charges from money otherwise due. This could take effect even though
the adjudicator had not included in his decision a sum in respect of these back
charges. It was unfortunate that the decision was unclear but in the
circumstances the court decided that the question of set off depends upon
what is included in the decision. As the decision did not indicate that any sum
should be paid, the court refused to order enforcement of a part only of the
decision without taking into account other parts.
In this case the court refused to enforce payment of the sum of £341,176 to
Geris.
QUESTIONS
1.0 Is an adjudicator empowered to take into account matters which are
relevant to the dispute which is the subject of the referral, but which have
not been included in the submissions by either of the parties or raised at
any time during the proceedings?
Yes or No
2.0 What is the position if parties enter into a standard form of contract which
includes an adjudication clause for undertaking construction work but also
enter into a side agreement which has been specifically drafted but does
not include an adjudication clause. Will the adjudication clause in the
standard contract be applicable to the side agreement?
Yes or No
3.0 An adjudicator issued a decision that A is to pay B the sum of £100,000.
Both parties felt that if the case were referred to arbitration the award
would be much less than £100,000. The parties then entered into a
compromise agreement under which A is to pay B the sum of £80,000.
Would A be entitled to ignore the compromise agreement and enforce the
adjudicator’s decision.
Yes or No
4.0 If an adjudicator in a decision orders A to make a substantial payment to
B can A successfully refuse to make payment on the grounds that B
whilst not in liquidation is unlikely to be able to repay A if the matter is
subsequently referred to arbitration and B is successful. A’s financial
position had not changed since the contract was entered into.
Yes or No
5.0 If an adjudicator in a decision orders A to make a substantial payment to
B can A successfully refuse to make payment on the grounds that B is in
liquidation and that Bs liquidator will in all probability be unable to repay
the money if A is successful in a subsequent arbitration.
Yes or No
6.0 A contractor enters into a contract for construction work with a sole trader.
A dispute arises which is referred to adjudication. The
decision goes in favour of the contractor and a sum of money becomes
payable. The sole trader refuses to make payment. Which of the
following legal procedures is the most appropriate to enforce payment.
Summary Judgement
or
Bankruptcy proceedings
7.0 A dispute is referred to adjudication whereby a contractor submits a
request for and extension of time and payment of loss and
expense. An extension of time is included in the decision together with a
payment in respect of loss and expense. There is however
still a shortfall between the extended completion date and actual
completion leaving the contractor exposed to a claim for liquidated
damages. The employer did not include in his submissions to the
adjudicator a claim for liquidated damages. Is the employer entitled
to deduct the liquidated damages from the amount of the adjudicator’s
decision.
Yes or No
ANSWERS
1.0 No
2.0 Yes
3.0 No
4.0 No
5.0 Yes
6.0 Summary Judgement
7.0 No