| Date | 13 March 2002 |
|
|
| Judgment | Shimizu Europe Limited -v- Automajor Limited TCC 17 January 2002 |
|
|
| The Issue | Procedures for resisting enforcement of an adjudicator's decision. |
|
|
| Implication |
Requesting an adjudicator to correct his decision under the slip rule or making part payment in respect of an adjudicator's decision, is inconsistent with seeking to overturn the decision for lack of jurisdiction. |
printThe case of Shimizu Europe -v- Automajor recently considered once again the manner in which a party might resist enforcement of an adjudicator's award. The contract between Shimizu and Automajor was in the JCT Standard Form 1998 with Contractor's Design. The agreement incorporated the Technology and Construction Solicitors Association (TeCSA) Rules for Adjudication. It is perfectly legitimate to include contractual provisions for adjudication providing these are not contradictory to the requirements of the Construction Act. Clause 11 of the TeCSA Rules provides that the scope of the adjudication shall be the matters identified in the notice requiring adjudication, together with any further matters which all parties agree should be within the scope of the adjudication and any further matters which the adjudicator determines must be included in order that the adjudication may be effective and/or meaningful. Clause 12 of the Rules provides that the adjudicator may rule upon his own substantive jurisdiction. Clause 28 provides that the decision of the adjudicator shall be implemented without delay. The clause goes on to state that the parties shall be entitled to summary enforcement of the decision, regardless of whether the decision is or is not to be the subject of any challenge or review. Neither party is entitled to raise any right of set-off, counterclaim or abatement in connection with any enforcement proceedings. One of the elements in the claim referred to adjudication by Shimizu was a claim for a sum of approximately £153,000 in respect of alleged variations to the works. The detailed breakdown of that sum included, in the normal manner, both additions and omissions. The adjudicator went on to award Shimizu the sum of approximately £321,000. This figure included an element of £143,000 in respect of the variations, notwithstanding that the adjudicator had held that certain of the variations were to be disallowed. Upon receipt of the award, solicitors acting on behalf of Automajor wrote to the adjudicator in terms that they believed the decision to contain an error which impacted upon the adjudicator's jurisdiction. In particular, Automajor argued that the decision was erroneous because it failed to take account of the payments already made in respect of variations. Since the referring party was seeking payment only of the difference between its claim and what had actually been paid, Automajor argued that the adjudicator had exceeded his jurisdiction. Automajor invited the adjudicator to correct his decision on the basis that he had made a 'slip'. The adjudicator refused believing that an agreement had been reached at a meeting with the parties, to the effect that the payments on account of certain variations should be ignored by the adjudicator. Automajor made a payment of a sum of approximately £146,000 and the matter proceeded to enforcement for the outstanding balance of £175,000, together with interest. On the application for enforcement of the adjudicator's decision, evidence was put before the court that the adjudicator had misunderstood the position of Automajor in relation of the sum to be included in any award in respect of variations. Shimizu countered by saying that, if the adjudicator had made a mistake in relation to the account in respect of variations, the effect of that was only that his decision in the award was wrong, not that it was made without jurisdiction. His Honour Judge Richard Seymour QC concluded that once the issues referred to the adjudicator had been correctly identified, if the adjudicator made a mistake, that mistake concerned the evaluation of what sum, if any, should be paid by Automajor. It was not a mistake as to what he was being asked to decide. The proper mechanism for correcting the error, if there was an error, would be in the course of a final account negotiation or in arbitration proceedings. In the circumstances of the case it was not open to Automajor to challenge the award of the adjudicator on jurisdictional grounds. The adjudicator had jurisdiction to make a mistake as long he asked himself the questions which had actually been referred to him. Nothing contained in the TeCSA rules contradicted this general approach. In concluding his comments on the case, Judge Seymour commented on the alternative case put forward by Shimizu. Shimizu had argued that even if the adjudicator had exceeded his jurisdiction in making the award, Automajor had waived its right to object to the award by making a part payment of the sum and by inviting the adjudicator to correct the award. Judge Seymour accepted those propositions. He noted that it cannot be right that it is open to a party to an adjudication simultaneously to approve and to disapprove a decision of the adjudicator. Assuming that good grounds exist on which a decision may be subject to objection, either the whole of the relevant decision must be accepted or the whole of it must be contested. The invitation to the adjudicator to correct his award under the slip rule is only consistent with recognising the award as valid. Moreover, by paying part of the sum awarded by the adjudicator, Automajor had elected to treat the award as valid, otherwise there was no need to pay Shimizu anything and it would not have been appropriate to do so.
CJ-0210
|
|||
|
© Brewer Consulting |
|||
 |
|||