REUTERS | Mark Blinch

Adjudicator’s discretion to decide parties’ dispute just got wider

Not that long ago, I suggested it was great to see Coulson J back giving robust TCC judgments. Therefore, it came as no surprise to see what he had to say in Wycombe Demolition v Topevent. Some of his words are worthy of repeating at the outset. In fact, it is arguable that I should let his words do the talking and say no more:

“An adjudicator has to do his best with the material with which he is provided. He has considerable latitude to reach his own conclusions based on that material, and he is certainly not bound to accept either one or other of the figures advanced by the parties. In my view, this latitude will inevitably be even wider now that the original constraint provided by the 1996 Act, that there had to be a written contract between the parties, has been removed by amendment. As happened here, an adjudicator’s conclusion about the nature and terms of the contract could affect his approach to valuation issues.”

However, you may feel short-changed if I don’t add something to this quotation. While the paragraph raises a number of points, first, I’d better mention a bit about the case.

Wycombe Demolition Ltd v Topevent Ltd

Wycombe Demolition was employed by Topevent to carry out demolition works at a site at Lane End, Wycombe. The parties agreed they had a construction contract, but disagreed over when the contract was made. They also disagreed over the extent of the works that Wycombe had carried out before leaving site (which the adjudicator said was probably ended by mutual consent).

Some months before the dispute was referred to adjudication, Topevent was arguing (via its claims consultant, Benchmark) that a substantial portion of the building in phase 1B of the works was still standing and the ground floor slab and foundations of the phase 2B building still needed to be excavated and crushed. Unsurprisingly, there was a dispute over how much was due to Wycombe for the works (including variations and extra works) and what was the value (if any) of Topevent’s counterclaim.

These issues were referred to the adjudicator.

“An adjudicator has to do his best with the material with which he is provided”

You may (or may not) be surprised to hear that parties’ submissions are often less than clear on an issue, so I can sympathise with this adjudicator. It seems there were difficulties with the “precise nature of Topevent’s defence on the valuation issue”.

This led to the adjudicator directing Topevent to prepare a Scott Schedule. It seems that schedule didn’t help matters, as it only:

“…served to complicate matters and encourage Topevent to include a further counterclaim in relation to [Wycombe’s] alleged failure to complete the Works.”

Wycombe put in an 18-page reply to the schedule (rather than completing the schedule), but the adjudicator gave up trying to reconcile the figures. Instead, he reverted to the amounts set out in the invoices prepared by Mrs Hawes of Wycombe, which he found “generally properly reflect the sums due”.

The adjudicator also had issues with the parties’ analysis of Wycombe’s entitlement, based on the contract. He rejected outright Wycombe’s analysis of when the contract was entered into. This impacted on the amount that would be due to Wycombe. He also rejected Topevent’s analysis, although he noted that it “probably more closely reflects the contractual position”.

“considerable latitude to reach his own conclusions based on the material

In the enforcement proceedings, Topevent argued that rather than deciding the valuation on the basis of the parties’ submissions, he decided it on a basis that the parties had not had an opportunity to address him on.

Coulson J gave this argument short shrift, suggesting instead that the adjudicator was:

“…faced with a myriad of different approaches to valuation… far from coming to a decision that was based on his own independent approach to the figures, [he] carefully considered both parties’ submissions and then, as he was entitled to do, provided his own valuation based on those submissions.”

It is good to hear that the adjudicator could not be criticised for doing what he was asked to do, and to know that there was no breach of the rules of natural justice. The adjudicator had not gone off on a frolic of his own.

“this latitude will inevitably be even wider now”

I thought it was interesting that the adjudicator dismissed Wycombe’s formulation of the contract, but that didn’t affect his jurisdiction to deal with the dispute. In other words, now that the scope of adjudication extends to oral contracts, adjudicators may determine the terms of an oral contract. It will not matter if this determination affects the adjudicator’s approach to valuation issues. It also appears that it does not matter if the adjudicator decides that the nature and terms of that oral contract are different to that argued by the parties.

I looked at this issue a few weeks ago, when I wrote about Stuart-Smith J’s judgment in Purton v Kilker. Then the court said that it was “clear beyond argument” that there was a contract. Further, that it did not matter if the contract relied on was the correct contract provided that there was a construction contract and a dispute arising under it. This is what gave the adjudicator jurisdiction. Also that it was unnecessary to identify “each and every term with complete accuracy”.

Looks to me like that is 2:0 to adjudicators dealing with oral contracts!

MCMS Ltd Matt Molloy

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