Summary

The judgment provides a key authority on the matter of serial adjudications. The second adjudicator should look at the substance of what the first adjudicator had decided. The court will be reluctant to interfere with this decision.

In addition, the court has narrowed the circumstances in which a referring party may seek to differentiate their claims as a 'new' dispute. The fact that a second claim in adjudication relies on new evidence not available at the time of the first adjudication is no longer a primary consideration. If the dispute is the "same or substantially the same", the new evidence is irrelevant.

Background

The appellant contractor, ("Sudlows"), had been engaged under a JCT Design & Build contract by Global, the employer, ("Global"), to fit out a data hall. Disputes arose in relation to delays and defective works, with the dispute centring on whether it had been Global's ductwork installation, or Sudlows' subsequent cable installation, which had caused the defects.

In the first adjudication, the adjudicator had decided that the defective work was caused by Global's works and therefore awarded part of the extension of time claimed by Sudlows.

Sudlows then launched a second adjudication to claim a further extension of time for a later period, arising from the same ductwork defects. Global submitted to the second adjudicator, ("M"), that Sudlows should not have been awarded the first extension of time and relied on the same evidence it had produced in the first adjudication, with additional new reports setting out why the ductwork had not been Global's fault.

M concluded that he was bound by the first adjudicator's decision but noted in the alternative that he would have otherwise found for Global. Global challenged M's decision in the High Court.

The High Court found that the two extension of time claims related to different time periods and that the second adjudication included new evidence. It therefore concluded that the disputes were not the same and that M had not been bound by the first adjudication decision. The High Court found for Global on the basis of M's alternative finding.

Decision of the Court of Appeal

Sudlows successfully appealed the High Court decision.

The Court of Appeal restated the authorities with respect to serial adjudications as follows:

i. Under s.108 of the Housing, Grants, Construction and Regeneration Act 1996 an adjudicator's decision is binding until the dispute is determined in legal proceedings.

ii. Under the Scheme for Construction Contracts (England and Wales) Regulations 1998 Sch.1 Pt I para.9(2), an adjudicator cannot determine a dispute which is the same or substantially the same as one already determined in a previous adjudication.

iii. In considering whether two adjudication disputes overlap, there are three important principles.

1) First, the purpose of construction adjudication is not always easy to reconcile with serial adjudications. The importance of temporary finality means that adjudicators are encouraged to give a robust and common sense answer to the issue of overlap.

2) Second, to determine if the second adjudication impinged on an earlier decision, the important question is what the first adjudicator had actually decided.

3) Third, there is a need for flexibility and the overlap test's purpose is to prevent a party from re-adjudicating a claim or defence on which they had unequivocally lost, while ensuring that new claims and defences are not shut out. One way of checking this is to consider whether, if the second adjudication continued, it could lead to a result that was fundamentally incompatible with the first adjudication's result.

While the Court of Appeal acknowledged that it was not bound by M's decision (that M was bound by the first adjudication), it did consider that it should be slow to interfere with this decision. M had been right to reach his decision, and the High Court had been wrong to come to a different view.

The starting point was M's decision:

a) M had applied the correct test by looking at what the first adjudicator had actually decided and finding that it was the same issue that had been referred to him.

b) The fact that the adjudications referred to different time periods had little weight, on the facts. In serial adjudications, the policing of such a debate should be primarily left to the adjudicators, unless something went clearly wrong.

With regards to the same dispute issue, the second dispute had been substantially the same as the first. The only significant dispute in both adjudications had been which party was contractually responsible for ductwork. That made the delay issue in the instant case very unusual. Usually delay issues would range across different relevant events with different alleged effects. The ductwork issue was the only cause of the relevant event, and the first adjudicator concluded that the Global was responsible for it.

That conclusion was binding on the parties and subsequent adjudicators. Global could have challenged it in court, but instead sought to challenge it in a second adjudication, in which it sought to rely on the evidence that it had unsuccessfully relied upon before, and also two further short reports, which were new.

It was not enough to look at the result of the first adjudication only in terms of the extension of time granted. That looked only at the form of the result, not its substance, which was the contractual responsibility for the ductwork. In the circumstances, the fact that new evidence had been presented was irrelevant; the underlying dispute was the same.

The Court's conclusion was simple – M had been bound by the first adjudication. His decision was reinstated in favour of Sudlows.

Take away

Parties should be wary in serial adjudications and take note of the comments made by the Court of Appeal which seeks to adopt a common sense approach to what is the 'same or substantially the same' dispute. The issue of new evidence of itself will not change the answer to that question.