It is always important to ensure the correct building blocks of an adjudication are in place or the parties proceed at risk of challenge. In Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 269 this included the need to not overlook correctly appointing your adjudicator. The starting point – always consider the wording of your contract, including any amendments. Of relevance to this case were the amended provisions for i) adjudication; and ii) interim and final payments.
Background:
Bellway appointed Surgo as the main contractor on a development near Newcastle under a JCT Intermediate Building Contract with Contractor’s Design 2016 (the " Contract "), with a series of bespoke amendments. Four adjudications had taken place under the Contract.
Bellway made an application for summary judgment to enforce the decision of an adjudicator, Mr Cope, whose decision held that on assessment of the true value of the account between the parties Surgo should pay the principal sum of c.£1.1million to Bellway. In response to the application, Surgo sought declarations to establish that the adjudicator did not have jurisdiction to make the decision and that it was therefore not liable to pay the principal sum to Bellway.
Adjudication terms – as amended
The general adjudication operating procedure is that once the notice of adjudication is given an adjudicator should be appointed and the dispute referred to them, within a period of 7 days. The Contract did allow for any dispute or difference arising under the Contract to be referred to adjudication by either Party. However, this contract differed to "usual" adjudication terms that parties might be familiar with. As so often is the case, the battleground for the jurisdictional challenge focused on the Contract's amendments. The key amendments were that the adjudicator would be i) selected from the "Bellway Panel of Adjudicators" and ii) the 7 day period had been replaced by " as soon as reasonably possible after ".
Jurisdictional challenge
Surgo raised the issue as to whether or not Mr Cope was validly appointed and, therefore, had jurisdiction to determine the dispute.
In summary, Surgo claimed the contractual adjudication terms contravened the Housing Grants, Construction and Regeneration Act 1996 (" the Act ") with the result that the contractual terms should fall away and the Scheme should instead be applied. Surgo relied first on s108(2)(a) and (b) of the Act which provides that: "(2) The contract shall include provision in writing so as to (a) enable a party to give notice at any time of his intention to refer a dispute to adjudication; (b) provide a timetable with the object of securing the appointment of the adjudicator and referral of the dispute to him within 7 days of such notice ". Further, Surgo relied on s108(2)(e), which imposes a duty on the adjudicator to act impartially.
Surgo argued:
- clause 9.2.1.1 of the Contract meant it had to firstly obtain the Bellway panel list and then approach each of the 3 panel members in turn, to wait up to two days for each to accept or refuse appointment before it could approach RICS as the fallback adjudication nominating body. This prevented Surgo from giving notice to refer an adjudication at any time and imposed an unworkable timetable which did not secure the adjudicator's appointment and referral of the dispute within 7 days.
- the requirement to appoint an adjudicator from a panel list breached the policy of the Act requiring the appointment of " actually and ostensibly impartial adjudicators ".
Bellway rejected the above and defended the jurisdictional challenge on the basis that:
- Surgo exaggerated the practical difficulties for its own tactical purposes, for example, it was open to Surgo to request the panel list at any time e.g. before the Contract was concluded, at any time during the Contract, or becoming aware of the potential that it might wish to refer a dispute to adjudication.
- the Scheme itself (para 2) permits the parties to specify in the contract a person to act as adjudicator and makes provision for selection by a nominating body in default. Any well-informed person, looking at the Contract and the panel of adjudicators at the time of formation of the contract, would not perceive any real possibility of bias in this arrangement.
Judgment
The TCC favoured Bellway's submissions and held that:
- There is no good reason to think that all, or indeed most, contractors in Surgo's position would wish to wait until the last minute before even asking Bellway for the relevant panel list. The TCC was satisfied that there was an implied duty of co-operation upon which a contractor in Surgo's position could rely, either to enforce compliance or if breached to be free to ask RICS to nominate instead. Finally, it was found to be " inherently unlikely " that all 3 named panel adjudicators would each refuse and also each take the full 2 days to communicate that decision. The position would be very different if, for example, the list comprised 10 adjudicators, and if each was allowed up to 5 days to respond;
- The parties are still subject to the obligation to refer the dispute as soon as reasonably possible and, anyway, it is in the referring party's interests to do so. The amendments to clause 9.2.1 and the Contract particulars were not contrary to the Act. It is apparent that s.108(2)(b) requires the timetable to have the object of securing appointment and referral within 7 days of the notice of adjudication. That clearly envisages that the parties are free to agree that so long as the contract secures that objective it is not fatal that it may not prohibit a period in excess of 7 days; and
- There was no basis to suggest there were "ostensibly impartial adjudicators" – the parties had been free to agree that one or more identified persons should act as adjudicator and to include provision for a specified nominating body in default.
As such, Mr Cope's appointment was held to be valid and so his decision should be enforced. Bellway was entitled to be paid the amount decided by Mr Cope.
Key case takeaways
The case provides some useful guidance on what amendments to the JCT adjudication terms may be allowed and the approach the TCC will adopt in upholding how adjudicators are nominated by the parties. It is another example of the TCC's reluctance to interfere with the adjudication process and evidences that parties will only be able to resist enforcement on jurisdictional grounds in limited circumstances.
