Practical Law

So, now we all know that you can’t refer more than one dispute to the same adjudicator at the same time without the parties’ consent. Perhaps we always knew this, but am I alone in thinking that section 108 of the Construction Act 1996 and paragraph 8(1) of the Scheme for Construction Contracts 1998 were really referring to multiple disputes in the same adjudication and not multiple disputes in different adjudications?

Well, whether I was alone or not (and I’m sure those of you that disagree will be quick to point it out to me), we now have clarity on the point from Coulson J, following his judgment in Deluxe Art & Theme Ltd v Beck Interiors Ltd.

Paragraph 8(1) of the Scheme for Construction Contracts 1998

Paragraph 8(1) provides that:

“The adjudicator may, with the consent of all the parties to those disputes, adjudicate at the same time on more than one dispute under the same contract.”

Paragraph 8(2) refers to “related disputes under different contracts”, but that isn’t relevant for today.

Deluxe Art & Theme Ltd v Beck Interiors Ltd

This case was all about the refurbishment of the Lanesborough at Hyde Park Corner, London, which looks pretty special (not to mention expensive) from its website and so would have been a nice place to go for a site visit (but perhaps that is another blog!).

As part of the refurbishment, Beck engaged Deluxe to carry out the joinery work. Along the way, disputes arose between the parties, which Deluxe referred to adjudication. On each occasion, the RICS appointed Matthew Bastone as the adjudicator:

• Adjudication one came and went in July 2015, with Beck paying the sums the adjudicator awarded to Deluxe.
• Adjudication two was started in October 2015 and the adjudicator’s decision was given on 4 December 2015. It was about Deluxe’s claim for an extension of time and prolongation costs.
• Adjudication three is where the problems started, as Deluxe referred this dispute about retention to adjudication in November 2015, before adjudication two had run its course. Although, at the time, Beck objected to the adjudicator dealing with two disputes at the same time, the adjudicator continued and issued his decision on 11 December 2015.

Enforcement proceedings

Beck did not comply with decisions two and three and, when Deluxe commenced enforcement proceedings, it maintained its challenge to the adjudicator’s jurisdiction under paragraph 8(1) of the Scheme for Construction Contracts 1998.

One dispute or two?

Before looking at paragraph 8(1) of the Scheme for Construction Contracts 1998, Coulson J considered the number of disputes that had been referred in adjudications two and three. He observed that, if it was only one dispute, even though it was being heard in two separate adjudications, then Beck’s objection to the adjudicator dealing with two disputes at the same time would fall away.

However, he concluded that the two disputes were separate and gave a number of reasons, not least that Deluxe itself considered the two disputes to be separate. Why else would it have started adjudication three for retention money if it thought that item was included in adjudication two?

He went on to note that:

“…there is no authority to support the proposition that two different disputes, deliberately raised by the claiming party in two separate adjudication notices, and described in very different terms, could still somehow be part of the same dispute. All of the authorities about the reference of more than one dispute, which culminate in [Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] EWHC 2332 (TCC)], were cases where there was one notice of adjudication, and the outcome depended on the nature of the issues that had been referred to the adjudicator under that single notice.”

And that:

“…it would take a very unusual set of circumstances to conclude that the disputes referred to in the adjudication notices, started at different times, both formed part of the same dispute.”

I suspect that closes the door to parties attempting to use the “one dispute, one adjudicator, two adjudications” concept with clever, convoluted but, ultimately, artificial arguments. It may not stop some parties from trying though.

Adjudicator lacked jurisdiction as two disputes and no consent

Coulson J concluded that the correct interpretation of paragraph 8(1) is that there cannot be more than one dispute referred to the same adjudicator at the same time without the parties’ consent. That plain reading of the paragraph presented Deluxe with an “insurmountable jurisdictional hurdle”.

I agree that is clearly what paragraph 8(1) says and, as Coulson J comments, prior to Ramsey J’s judgment in Willmott Dixon v Newlon, “no-one had given much thought to this question”. He contrasts the facts in that case, which were based on the CIC adjudication rules, with the present case that was concerned with the language of the Scheme.

All this meant the decision in adjudication three could not be enforced, although there was nothing wrong with the decision in adjudication two, and that was enforced.

What about smash and grab adjudications – was consent implied?

I just wonder how much thought parties have given to this multiple dispute issue in the years before or since Ramsey J’s judgment. Following what Coulson J has decided, I suspect this issue will be at the forefront of parties’ minds for some time.

Like many adjudicators, I have acted in multiple concurrent adjudications between the same parties under the same contract on different issues. I’ve also been involved in counter or “smash and grab” adjudications, where I have acted in both adjudications at the same time (although that has all changed since Edwards-Stuart J handed down his judgment in ISG v Seevic in December 2014).

I assume one would argue that consent under paragraph 8(1) was implied in these circumstances. Certainly, I’m not aware of being advised that the parties had agreed to these situations, nor do I recall any jurisdictional challenges when it happened to me. Even if my jurisdiction had been challenged, I’m not sure that I would have been persuaded to resign.

Where does this leave us?

This judgment may not affect how referring parties behave, but it will influence how the responding party reacts. The onus will now be on them to decide whether they want the same individual to deal with a subsequent dispute (arguably, the onus always was on them to raise it as a jurisdictional issue, just as Beck did). In many instances they may well agree to the appointment. I guess it will all depend on what they think of the individual and previous decisions that individual has issued.

It may be more complicated for others. While adjudicators and the parties will clearly be aware of whether they have an on-going adjudication, the same cannot be said for the adjudicator nominating bodies (ANBs). That means they may inadvertently fall foul of their own policy of appointing the same adjudicator to deal with disputes between the same parties under the same contract. Therefore, the emphasis will have to be on the parties not to try and pull a “fast one” and for adjudicators to resign promptly in such circumstances.

Happy days!