| Date | 17 January 2007 |
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| Judgment | Quietfield Limited v Vascroft Construction Limited, CA, 20 December 2006 |
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| The Issue | In what circumstances can a new dispute be said to have arisen, different from one that has been previously adjudicated. |
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| Implication |
The dispute originally referred must be carefully considered before concluding whether a decision prevents a further reference to adjudication being made. |
printOne of the dilemmas faced by anyone contemplating adjudication, or any other formal means of dispute resolution, is that whilst they obviously hope to get a favourable answer that will be binding upon both parties, an unfavourable answer will be just as binding. It is for this reason that well advised parties will normally take a lot of care to ensure that the dispute referred to adjudication is precisely that upon which the decision is sought, no more and no less, thus minimising the risk that a decision is obtained which has wider and unintended consequences. One example of how this can be achieved is where a contractor seeks to refer a dispute based upon the value of an interim application, with the intention that if the answer is not to its liking then there may be scope to subsequently adjudicate a further dispute concerning the final account. Alternatively a contractor may refer a dispute as to whether a particular instruction gives rise to a variation, whilst keeping arguments in relation to other disputed instructions in reserve for another day. In the case of Quietfield Limited v Vascroft Construction Limited, which was considered by my colleague Peter Phillippo in Contract Journal on 22 March 2006, a judge refused to enforce an adjudicator’s decision on the grounds that he had failed to consider certain matters raised by Vascroft in its defence of Quietfield’s claim for the payment of liquidated damages. The matters raised by Vascroft comprised a comprehensive extension of time submission, which the adjudicator was unwilling to consider because he had previously considered and decided, in an earlier adjudication, that Vascroft had established no entitlement to an extension of time. The court thought that this refusal to consider the contractor’s new submission, which differed significantly from that made in the earlier adjudication as to both the Relevant Events relied upon and the way in which delay was demonstrated, was a breach of natural justice such as to render the decision unenforceable. In reaching this decision the judge focussed upon the identification of the dispute that had been referred in the earlier adjudication and whether (as the contractor alleged) it was limited to a narrow set of circumstances such that it was possible for further matters to be raised in support of an entitlement to extension of time within the later adjudication or whether, as the employer alleged, the decision was determinative of the whole of the contractor’s extension of time entitlement. The sums involved were substantial (c. £600,000.00) and permission was obtained to appeal to the Court of Appeal. In its judgement the Court of Appeal upheld the decision of the lower court, stating that it was “the right conclusion for the right reasons”. Additionally, Lord Justice Dyson added some interesting observations regarding extensions of time in the context of JCT forms of contract. As the JCT standard form of building contract expressly anticipates that there may be multiple notifications of delay, provided that each notification of a Relevant Event is in respect of different material circumstances, and any particulars or estimates of effect provided by the contractor were also different, then each notification or submission would merit separate consideration by the architect. Thus any one of these notifications or submissions of particulars could, depending upon the facts, give rise to a dispute if it were to be rejected by the architect. However, whilst the judge accepted that a contractor may chose to provide progressively more or better information to an architect regarding a particular cause of delay in the hope that it may convince the architect of the validity of its position, he did not consider that such an approach should be applied in adjudication. Drawing a comparison with the Scheme for Construction Contracts Lord Justice Dyson was observed that paragraph 9(2) provides that an adjudicator must resign where the dispute is the same or substantially the same as one that has been referred to adjudication and a decision taken in that adjudication, thus leading to the inference that it was not intended that disputes should be referred to adjudication in such circumstances. As much as anything this was to prevent respondents from the expense and trouble of successive adjudications, in the same way that litigation would not be permitted in such circumstances. Whilst there remains scope for the same Relevant Event to give rise to two successive disputes and two successive adjudications, whether it does or not will be a question of fact and degree. Where, for example, the second notification simply makes good deficiencies in the earlier notification there is unlikely to be a separate dispute, presumably because the underlying facts will be the same. In the case of Vascroft however, its new submission identified Relevant Events which were substantially more extensive than those which had been the subject of the earlier adjudication, meaning that it should have been considered by the adjudicator. Of course, had he taken this course of action the adjudicator would then have been faced with the difficult task of disentangling from the new submission those matters upon which he had originally decided (together with any further explanation which was simply an attempt to make good the shortcomings of the earlier submission) from any genuinely new Relevant Events or genuinely new effects of the original Relevant Events. This would have been easier said than done.
CJ-0702
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