REUTERS | Toby Melville

The perils of serial adjudication

Major construction projects often result in a number of adjudications between the same parties. It is a hazard of the job, so to speak. Known as “serial adjudication“, it can give rise to a number of issues, not least the question of what the previous adjudicator(s) decided.

While it is easy to say that the decision in adjudication one is binding on subsequent adjudicators (as is the decision in adjudication two and so on), in practice it isn’t always easy to see if the dispute that was referred in adjudication two (or three) was the same as the dispute in adjudication one (and two). As everyone knows, this has led to a considerable body of case law on the question of whether the dispute is the “same or substantially the same“. It is a question that goes to the heart of an adjudicator’s jurisdiction.

The issue of serial adjudication was before me recently, when I had to untangle what was (and what wasn’t) decided by a previous adjudicator. It reminded me of some of the issues in HHJ David Grant’s judgment in Niken Construction Ltd v Trigram Carver Street Ltd.

Niken Construction Ltd v Trigram Carver Street Ltd

To me, this looks like a fairly typical construction dispute. The contractor (Niken) agreed with the employer (Trigram) to design and build a block containing 24 apartments and a commercial unit in the Jewellery Quarter in Birmingham. The contract was valued at just over £2.26 million and incorporated the JCT Design and Build Contract, 2011 Edition. The completion date was in October 2015.

However, things clearly did not go well because, in October 2015, both parties purported to terminate the contract, with the:

  • Employer getting in first and arguing that the contractor had failed to proceed “regularly and diligently” with the works (under clause 8.4).
  • Contractor arguing that the employer had failed to make payment of the full amount of interim application number seven and had failed to serve a pay less notice.

Unsurprisingly in that situation, a number of adjudications followed:

  • In November 2015, the first adjudicator ordered the employer to pay the balance of interim application number seven (some £40,900), which it did.
  • In December 2015, the employer asked the second adjudicator to decide whether it had lawfully terminated the contract. The second adjudicator decided it had not done so.
  • A subsequent adjudication concerned the contractor’s termination account, which the third adjudicator decided in the contractor’s favour, ordering the employer to pay some £180,000.

It is worth noting that the same individual acted as the second and third adjudicator and that the focus of the judgment is on the employer’s arguments resisting enforcement of the third adjudicator’s decision, and its submission that its own proceedings should be consolidated with those enforcement proceedings.

“Same or substantially the same” dispute

However, back to my original point about whether it was the “same or substantially the same” dispute.

In Niken v Tigram, it was fairly clear-cut that the parties referred different issues in the three adjudications (an interim payment, termination and a termination (final) account). But that isn’t always the case. While I can’t give away the details of the case I had to decide, needless to say that by referring a dispute where there was even a question mark over what had been referred before, resulted in me having to spend time looking at the jurisdiction point. It has also opened up the possibility of an enforcement challenge down the line (and you only have to look at the Court of Appeal decisions that have focused on the extent to which a subsequent adjudicator was deciding an issue that had already been decided (Quietfield v Vascroft, Harding v Paice and Brown v Complete Building Solutions Ltd) to see this is a contentious area).

Of course, one way to lessen the impact of this is to appoint the same individual as the adjudicator on each occasion the need arises. I realise that this isn’t always possible. Sometimes the same individual is not available, sometimes the parties don’t want the same individual again and sometimes, for tactical reasons, parties don’t want their disputes to be dealt with sequentially (which is only an issue if the Scheme for Construction Contracts 1998 applies). Alternatively, they may actively choose to have simultaneous adjudications before different adjudicators for tactical reasons. Perhaps they want one adjudicator looking at, for example, a merits based claim (like delay), while another has a more “technical” dispute, like a smash and grab.

As I see it, where there is no overlap, there is no problem. It is when the distinguishing lines blur that problems (potentially at least) arise. In the words of Visage, “We fade to grey“.

MCMS Ltd Matt Molloy

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