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Can you use adjudication to resolve preliminary issues?

We often see TCC judgments where the court has granted a party declaratory relief on an issue. When adjudication proceedings are (or have been) on-going, this commonly arises in the context of an adjudicator’s alleged breach of the rules of natural justice or because of a jurisdictional issue.

Given the number of disputes that are referred to adjudication, and the small number that involve court proceedings, it is probably no surprise that we rarely see the court dealing with preliminary issues. That said, there have been a couple of examples recently (namely Carillion Construction Ltd v Woods Bagot Europe Ltd and Emcor and Amec Foster Wheeler Group Ltd v Morgan Sindall). They both made me think about how disputes can be split into bite-sized chunks and referred to adjudication, just like preliminary issues can be dealt with by a court. 

Preliminary issues and the TCC Guide

The TCC Guide describes a preliminary issue as being a hearing:

“…at which the court considers and delivers a binding judgment on particular issues in advance of the main trial.”

It goes on to suggest they can be:

“…an extremely cost-effective and efficient way of narrowing the issues between the parties and, in certain cases, of resolving disputes altogether.”

The TCC Guide acknowledges that there are no “hard and fast rules” for what may be suitable for a preliminary issue hearing, but does set out some guidelines and gives some common examples. These will be familiar to construction lawyers, focusing as they do on contract issues:

  • Was there a binding contract?
  • What documents make up the contract?
  • What do specific clauses of the contract mean?

I’ve seen these arguments frequently raised in adjudication too, as I’m sure you have. Less familiar arguments may focus on limitation, no loss and causation.

Carillion and Amec

In  Carillion v Woods Bagot and Emcor, the preliminary issue hearing focused on whether one of the sub-contractors, Emcor, was entitled to an extension of time and, assuming that it was (which the parties agreed for the purposes of the preliminary issue hearing), was that extension:

  • To run contiguously from the end of the current period for completion to provide an aggregate period in which Emcor had to complete its sub-contract works (as Emcor contended).
  • A further period during which Emcor could undertake its sub-contract works, which was not necessarily contiguous but reflected the period for which it had been delayed (as Carillion contended)?

Emcor argued for the former position, Carillion the latter, and the court agreed with Emcor.

In Amec v Morgan Sindall, the four preliminary issues before Edwards-Stuart J included determining whether the certificate of making good defects covered all of the works (that is, the hotel and the apartments) or just the apartments. The court held that the certificate of making good defects related only to the apartments.

I’d say both of these cases loosely fall within the third example of a preliminary issue that I gave above (namely, what do specific clauses of the contract mean?).

Preliminary issues and adjudication

Interestingly, the TCC Guide suggests that preliminary issues can be used as an adjunct to ADR where there is a “sticking point” that prevents the parties from resolving the dispute through negotiation or mediation without the court’s final decision on a point. This can be done through the Part 8 declaratory relief process or by starting proceedings in the usual way (under Part 7) and then applying at the CMC for a preliminary issue hearing.

In my experience, it is rare to find a matter that has been the subject of a preliminary issue subsequently being referred to adjudication. However, you are likely to see a declaratory relief judgment from time to time, especially if the issue relates to the adjudicator in some way. For example, see Coulson J’s judgment in Penten Group Ltd v Spartafield Ltdwhere declaratory relief was granted in relation to an earlier adjudicator’s decision and before I was due to make my decision in the parties’ fourth adjudication. The court’s findings meant that I was bound by that earlier decision, which had decided that the parties’ contract was based on a letter of intent and not the ICD 2011.

I sometimes find I am asked to deal with a dispute via adjudication in the manner of a court dealing with preliminary issues. This may be in the context of a serial adjudication (although you might not know it is going to be a serial adjudication at the outset), where the issue referred to adjudication is a discrete one related to something like whether an event is a Relevant Event under a JCT contract. In a recent case, I was asked to determine this very question, but I wasn’t asked to go on and look at delay or the event’s impact on the completion date. The question of money was also left for another day.

As with the outcome of a declaratory relief or preliminary issue hearing, this can lead to a case being struck out at the first hurdle, even in adjudication. This means (as the TCC Guide says) it can be “an extremely cost-effective and efficient way of narrowing the issues between the parties” because it saves them the expense of addressing all the issues between them.

MCMS Ltd Matt Molloy

2 thoughts on “Can you use adjudication to resolve preliminary issues?

  1. Readers may be interested to note that, in February 2017, the first instance judgment in Carillion Construction Ltd v Woods Bagot Europe Ltd and others [2016] EWHC 905 (TCC) was upheld by the Court of Appeal in Carillion Construction Ltd v Emcor Engineering Services Ltd and another [2017] EWCA Civ 65 (see Legal update, Contiguous extension of time in sub-contract).

  2. Is a summary, non-judicial, non-adversarial proceeding which states in the rule:
    Neither the granting or denial of the motion [for an Order of Sale] shall constitute an appealable Order or Judgment. Any aggrieved person may seek injunctive or other relief in any court of competent jurisdiction.
    the court determines only two issues. 1. Whether there is a default; and 2 whether the homeowner is subject to the Service Members’ Civil Relief Act.
    No Rights are resolved and must be left to a subsequent court which may include a federal court.
    Is this an adjudication?
    Has the State voluntarily and Implied waived sovereign immunity if the aggrieved person goes to federal court?

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