Sudlows Ltd v Global Switch Estates 1 Ltd

[2023] EWCA Civ 813

This issue here was that the adjudicator in adjudication number 6 decided that he was bound by the findings in adjudication number 5, which meant that Global were contractually liable for what were termed as “the cabling and ductwork issues”, and should, as a consequence, pay Sudlows just under £1 million. However, if he had not been bound, the second adjudicator had also said that, based on the information in adjudication 6,  he would have come to a different conclusion on the issue of contractual liability, with the result that Sudlows would have had to pay Global in excess of £200k. At first instance, the Judge concluded that the later adjudicator had been wrong to find that he was bound by the result in the earlier adjudication and gave judgment in favour of Global. Sudlows appealed. 

Adjudication 5 concerned Sudlows’ claim for an extension of time (“EOT”). The critical issue was very narrow. There was no dispute that the delay was caused by anything other than the cabling and ductwork issues. There were no other competing Relevant Events. The only issue was which party was contractually responsible for the cabling and ductwork. Having found that Global were responsible, the adjudicator held that Sudlows were entitled to an EOT of 482 days.

In Adjudication 6, described as the continuation of the delay assessed in Adjudication 5 flowing from the cabling and ductwork issues, Sudlows sought an additional EOT of 133 days. The Referral also contained a full loss and expense claim, amounting to just over £12 million. 

Global “made no bones” about their dissatisfaction with the previous decision and relied on all the evidence that they had unsuccessfully relied on before. Global also relied on two further short reports which Global said demonstrated that there was nothing wrong (and had never been anything wrong) with the ductwork. The Judge below, noted the “dramatic” effect of the new material on the second adjudicator. The Judge also said that the fact that both adjudications dealt with the same Relevant Event was “plainly insufficient” to mean that, in both adjudications, the dispute was the same or substantially so. They related to underlying EOTs for different periods of time, and there were new materials, which were not, and could not have been, part of the dispute leading to the prior adjudication. 

Coulson LJ noted that the practice of serial adjudication, involving repeated references of disputes to adjudication under the same contract, is not always easy to reconcile with the emphasis on speed and proportionality. He said: “Put more shortly, it is harder to adhere to the principle of ‘pay now, argue later’ when you are constantly arguing now.”Adjudication is supposed to be a quick one-off event; it should not be allowed to become a process by which a series of decisions by different people can be sought every time a new issue or a new way of putting a case occurs to one or other of the contracting parties.

The Judge thought that there were three over-arching principles to be applied when considering arguments of overlap. 

(i) If the parties to a construction contract do engage in serial adjudication, and then inevitably get drawn into debates about whether a particular dispute has already been decided, the need for speed and the importance of at least temporary finality mean that the adjudicator (and, if necessary, the court on enforcement) should be encouraged to give a robust and common sense answer to the issue. 

(ii) You need to look at what the first adjudicator actually decided to see if the second adjudicator has impinged on the earlier decision. What matters is what it was, in reality, that the adjudicator decided. It is that which cannot be re-adjudicated. 

(iii) There is a need for flexibility. That is the purpose of a test of fact and degree. It is to prevent a party from re-adjudicating a claim (or a defence) on which they have unequivocally lost, but to ensure that what is essentially a new claim, or a new defence, is not shut out. The re-adjudication of the same claims, where the only differences were the figures, was impermissible whilst a new, wider claim or defence was permissible, even if it included elements of a claim which had been considered before. 

Here, Global said that Adjudication 6 concerned a fresh claim for an EOT and an entirely new claim for loss and expense. Coulson LJ noted that the second adjudicator had looked at what had been decided in the previous adjudication, including the essential finding as to Global’s contractual responsibility for the cabling and ductwork issues. As this was the same issue that had been referred to him, he concluded that this was sufficient to bind him in respect of the further extension period claimed in Adjudication 6. Coulson LJ noted that, on the critical issue of overlap, it was: “important that, in serial adjudications, the policing of this sort of debate is primarily left to the adjudicators themselves. The court should only intervene when something has gone clearly wrong in a later adjudicator’s decision.” 

This was a very unusual delay case. Typically, arguments about delay range across the alleged effects of different competing Relevant Events and the consequences of different critical path analyses. But that was not the case here. In both adjudications, it was agreed that there was only one cause of the relevant delay. The first adjudicator’s clear view as to Global’s contractual responsibility for the cabling and ductwork issues was binding on the parties and binding on any subsequent adjudicator.

It was not correct to suggest that the only binding element of the first Decision was the 482 day EOT award and nothing else. That ignored the reality of the decision in Adjudication 5. The fact that a different EOT period was claimed in the second adjudication did not make a difference. Nothing else had changed. There were still no other competing Relevant Events, and no other matters said to be on the critical path. There was no “new narrative” at all. 

If the second adjudicator was correct to say that he was not entitled to re-investigate the question of contractual responsibility for the cabling and ductwork issues, then the new evidence was irrelevant and inadmissible. It went to an entirely different matter, namely a challenge to the earlier decision. That could only be made in court proceedings or in arbitration. If Global wanted to argue about their contractual responsibility for the cabling and ductwork issues, then they were entitled to do so; but they had to do this later, in court or arbitration.

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