| Date | 13 April 2005 |
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| Judgment | Connex South Eastern Ltd v MJ Building Services plc, CA 1 March 2005 |
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| The Issue | Whether there is any limit to the timescale within which an adjudication may be commenced. |
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| Implication |
There is no concept of 'abuse of process' in adjudication giving Adjudicators power to strike out claims. Though the words "at any time" in the Construction Act bear their literal and ordinary meaning, a valid limitation defence will be effective in adjudication as elsewhere. |
printConnex South Eastern and Connex South Central are sister train operating companies that hold franchises for train services on railways in the south of England. Acting through a single project manager, in June 2000 both companies issued invitations to tender for the installation of closed circuit television systems (CCTV) for 50 stations across their rail networks. MJ Building Services submitted a tender for those works and at a meeting in September 2000, the project manager gave an oral instruction for MJ to commence the works. That instruction was evidenced in writing by minutes of the meeting, which was sufficient to generate a 'contract in writing' for the purposes of the Construction Act. Matters did not however run smoothly. Barely a week later, the project manager wrote to MJ saying that all CCTV works were to be suspended until further notice. Two months later an instruction to proceed was given, on the basis that the CCTV works would be carried out in separate phases. The works continued, but approximately one year later, in December 2001, MJ were once again notified that the works were to be suspended until further notice, although works at four stations which were under way were to be completed and commissioned. The following month, MJ submitted a claim to Connex in respect of materials it had procured for the stations that had been withdrawn. Throughout the following year Connex continued to maintain that it had no liability to pay for those materials on the grounds that the purchase had not been authorised and that there was no contract between the two companies. In November 2002, MJ wrote to Connex stating that its denial of the existence of the contract was a repudiatory breach which MJ accepted, thereby terminating the contract. Solicitors became involved and in February 2004 a total claim of some £360,000 was put forward to adjudication. The principal head of claim was for damages for loss of profit on the stations which had been removed from the contract. Before the adjudication could proceed, certain fundamental jurisdictional questions were raised and these were put to the court and subsequently to the Court of Appeal. One point of interest raised by Connex was that it was an 'abuse of process' for MJ to start adjudication proceedings so long after it had purported to accept a repudiation of the contract. Section 108(1) of the Construction Act confers the right to refer a dispute arising under the contract for adjudication. Subsection (2) provides that the contract shall "enable a party to give notice at any time of his intention to refer a dispute to adjudication". Connex argued that the phrase "at any time" should not be read literally. For example, Connex said, a party could not refer a dispute to adjudication after the expiry of the relevant limitation period. Connex maintained that there was nothing in the Act which indicated what Parliament meant by the words "at any time". In reviewing these complaints, Lord Justice Dyson commented that when the Bill was being debated in the House of Lords, Lord Lucas had said that the words "at any time" were necessary, since otherwise "it will be possible for a party bent on avoiding adjudication to insert a term which would allow notice to be given within an unreasonably narrow window and we cannot allow that". Lord Lucas had gone on to say during that debate; "I am of course aware that some have doubted the wisdom of allowing parties to refer a dispute to adjudication so long after the work under the contract has ceased. However, as long as there is any possibility of disputes arising under a contract, parties will have to live with the fact that an adjudicator's decision may be sought. Indeed, there may be times, even at such a late stage, where it is desirable to have a quick and cheap procedure that can produce an effective temporary decision, particularly since this will not prevent parties from seeking a permanent decision through arbitration or the courts". Lord Justice Dyson commented that none of this gave any support for Connex's contentions. The phrase "at any time" meant exactly what it said. It would have been possible to restrict the time within which adjudication could be commenced, but that was not done despite that this issue had been clearly and carefully considered as the matter was debated through Parliament. Lord Justice Dyson therefore confirmed that there is nothing to prevent a party from referring a dispute to adjudication at any time, even after the expiry of the relevant limitation period. Similarly, there is nothing to stop a party from issuing court proceedings after the expiry of the relevant limitation period. A party who takes that course of action in court proceedings runs the risk that, if a limitation defence is pleaded, the claim will fail. In adjudication, the adjudicator may also make an award in favour of the respondent in the event of a valid limitation defence. However, there is no concept of 'abuse of process' in adjudication, and neither the Act nor the Scheme for Construction Contracts gives an adjudicator the power to strike out or stay an adjudication for apparent 'abuse of process'. In conclusion, the fact that MJ had commenced adjudication one-and-a-half years after having purportedly accepted Connex's repudiatory breach of contract was irrelevant and provided no basis for a jurisdictional challenge to the adjudication process.
CJ-0514
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