Adjudication Update

As highlighted in last month's Edition, the CA has overturned the decision of Mr Recorder Moxon-Browne QC in the case of C&B Scene Concept Design Limited v Isobars Ltd. Only C&B were represented at the Appeal. Unfortunately, although the CA recognised that the question of whether failing to give a withholding notice within the stipulated of time was one of some importance to the construction industry and one where there has been a difference of judicial opinion, they did not think it right (in the absence of argument from Isobars) to express a view which would only be obiter (i.e. not binding).

Instead, the only question, which the CA believed, it was necessary to consider was whether the error on the part of the adjudicator, who had failed to appreciate that the contractual provisions had been superseded by the Scheme, went to his jurisdiction or was merely an erroneous decision of law on a matter within his jurisdiction.

This is only the second time that the CA has considered adjudication. Again they said nothing that will change the TCC's attitude to applications to enforce adjudicators' decisions. The CA confirmed that the purpose of adjudication is to provide a swift and effective means of resolution of dispute, which is binding during the currency of the contract until final determination. An adjudicator is given jurisdiction as determined by the dispute that is referred to him.

It is only when the adjudicator decides matters beyond the dispute referred that he has no jurisdiction. Here the scope of the dispute was agreed, namely the employer's obligations to make payment or otherwise. Thus the adjudicator had to resolve as a matter of law whether certain contractual clauses applied or not and if they did what the effect was of the failure to serve a timeous notice. Whist the adjudicator was as a matter of law incorrect, that error was within the scope of the dispute agreed between the parties. The adjudicator therefore answered the right question but in the wrong way and the claimant was therefore entitled to enforcement of the adjudicator's decision by means of summary judgment.

Lord Marnoch has delivered the first opinion on behalf of the Scottish Court of Appeal relating to adjudication. The case was Karl Construction (Scotland) Ltd v Sweeney Civil Engineering Limited. This decision is perhaps primarily of interest since the CA upheld the judgment at first instance and the decision of the adjudicator.

Since the original Judgment, Sweeney had gone into liquidation. Karl's position was that the dispute referred to the adjudicator had changed as a result of Sweeney's written response to points made in the adjudication by Karl. Quite simply, the CA disagreed with this contention stating it to be unsound. The adjudicator had been charged with ascertaining the law and therefore had no option but to apply the relevant law as she saw it.

In Solland International Ltd v Darayden Holdings Ltd, HHJ Seymour QC had to consider a claim for summary enforcement. Darayden resisted the application on the grounds that it was entitled to raise now, matters said to be relevant to what sum should be paid as a result of an adjudicator's decision.

Darayden claimed a right to set off a claim for liquidated damages under a related contract, which exceeded the total amount awarded. It also maintained that it had a claim for allegedly defective works and it was entitled to abate the sums awarded by the adjudicator by the amount of these claims, which were disputed by Solland.

HHJ Seymour QC held that the fact that there were apparently other disputes between the parties did not constitute any reason not to enter judgment for the sums awarded by the adjudicator. The parties had entered into a contract, which said that the decision of an adjudicator was binding pending final determination by the Court. There was no provision in that contract to set off or deduct against that award.

The judge was also asked to stay enforcement on the grounds that the adjudicated dispute was but one of a series of complex disputes concerning far greater sums than current one. He declined to do so. The question here was who should hold the money, which the adjudicator had decided, should be paid to Solland while the disputes between the parties were resolved. On the facts here, "the function of the Court" was to enforce that decision.

Expert Evidence

HHJ Thornton QC in the case of Amec Process & Energy Ltd v Stork Engineering & Contractors Ltd gave out the following warning to experts and those who instruct them.

In the midst of a very lengthy judgment, he noted that:

"...all the experts seriously transgressed good practice and the principles governing the reception of expert evidence.by adding to their reports voluminous schedules of primary documents and supporting data when none of that material should have been added and also by preparing reports.containing many matters which did not constitute expert opinion evidence.Expert evidence should be confined to those issues. previously.identified in detail by order or agreement of the court.there should not be annexed to the reports anything other than essential additional material of minimal. length and content.

Moreover, the evidence should be prepared long before the trial without undue rush. All the expert evidence was prepared by both parties' experts shortly before trial in an enormous hurry. The parties share equal responsibility for this since both appeared, in default of the CPR and the orders made in this case, to have decided not to start their intense preparations for trial until a very late stage in the pre-trial phase. Since both sides sinned with almost equal fervour in all these respects, it is neither profitable nor sensible to do anything more than express my disapproval of what was done."

Other Cases of Interest

In Urquart Associates v East Surrey Health Authority, the CA considered a claim for fees. The claimant architects prepared an outline redevelopment scheme. Their instruction letter said that if the job proceeded, they would have to compete with others to complete the scheme, but if another firm were appointed, then the claimant would be paid for its initial work. The claimant wrote to confirm this.

The claimant's scheme did not proceed and they sought payment for the earlier work. At first instance the claim was dismissed, as the original instruction did not provide for payment if the defendant appointed another firm to proceed with a different scheme from that proposed by the claimant. The architects claimed that their letter was a counter offer as it included the RIBA terms of appointment, which provided for payment if the proposed scheme did not proceed. The CA held that the letter of instruction clearly set out the oral agreement reached by the parties. The subsequent letter merely accepted the basis for the fee payment. The RIBA conditions only confirmed the percentages. The architects were not entitled to payment.

In Capital Trust Investments Ltd v Radio Design TJAB and Others, the CA considered an appeal against an Order staying proceedings under Section 9 of the 1996 Arbitration Act. It was claimed that Radio Design was not entitled to a stay because they had taken a step in the proceedings. Before the application for a stay was heard, Radio Design issued a further application seeking summary judgment to dismiss the claim in the event that their application for a stay was unsuccessful.

However the application for summary judgment was only to be advanced in the event that the other application was unsuccessful. This resulted in a step, which would otherwise have been a step in the proceedings (i.e. the application for a summary judgment) not being treated as such. In fact, at first instance, the Master having ordered the stay, with the consent of the parties, also considered the second application and dismissed the claim. However, as he had only been asked to do this in case the appeal against the stay failed, the CA agreed that the claim should nevertheless be stayed to arbitration in Sweden.

Employment

Awards in employment cases rose on 1 February 2002 in line with inflation. These effect statutory redundancy payments and awards for unfair dismissal. The basic awards have increased from £240 to £250 per week, up to a maximum of £7,500, whilst the maximum compensatory payment for unfair dismissal increased to £52,600.

Fenwick Elliott News

On 25 February 2002, Chris Whittington joined as a Partner. Chris, previously a partner and head of the southern region of the construction group at Shoosmiths, specialises in non-contentious matters, acting for a wide range of employers (including educational establishments developers, retailers, and pharmaceutical manufacturers), contractors and sub-contractors and advising on procurement methods, contracts, warranties and bonds. He also has wide experience of handling disputes in litigation as well as adjudication.

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