| Date | 26 March 2008 |
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| Judgment | Cantillon Limited v Urvasco Limited, TCC, 27 February 2008 |
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| The Issue | The extent to which an adjudicator has jurisdiction to decide the ramifications of a new defence. |
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| Implication |
A responding party may respond by providing any arguments it wishes to rely on whether or not they are new. The arguments that form part of the response may change the detailed ground on which the dispute is to be decided. There will not be a breach of natural justice provided that the parties have an adequate opportunity to address the adjudicator on the realistic permutations which might apply. |
printA question that quite often arises in adjudication concerns the extent to which a responding party can raise for the first time an entirely new defence. If so then does it follow that the scope of the dispute can be extended by such a defence or otherwise be extended beyond the basis of the dispute identified in the notice of adjudication and articulated in the Referral and does the adjudicator have jurisdiction to decide on such extended matters? In William Verry (Glazing Systems) v Furlong Homes (2005), the employer commenced an adjudication against the contractor on the whole final account including a contention that the extension of time that had been granted was correct. William Verry included with its Response an updated extension of time claim. Furlong objected but the adjudicator decided to allow the new claim by way of a defence. Furlong did not like the decision and argued at enforcement that the adjudicator had no jurisdiction to reach his decision on the basis of the new claim. HHJ Peter Coulson found that since William Verry was the responding party there was nothing to stop it from submitting a new claim by way of defence. He said “In my judgment, Verry were entitled to take whatever points they liked to defend themselves against the assertion that their extension entitlement was limited in the way advanced by Furlong and the adjudicator was obliged to consider all the points which they raised.” Importantly he found that Furlong had had sufficient time to deal with those new submissions and therefore the adjudicator's decision was binding upon the parties. This case confirmed that a responding party may defend itself by raising any arguments it pleases and provided the referring party has an adequate opportunity to deal with such in the adjudication, i.e. that there is procedural fairness in the process, then it is necessary for the adjudicator to take such arguments into account when reaching his decision. The more recent case of Cantillon Ltd v Urvasco Ltd (2008) in different circumstances took this analysis a little further. Although not discussed in this article, this case is also of interest because it considers the extent to which adjudication decisions may be separable. This case concerned the demolition of two buildings on the Strand in London, piling and some other works. An extension of time of 13 weeks for the ‘in-board permanent piling’ had been granted by the Architect and some loss and expense had been certified for this period of delay. The result of two subsequent adjudications was that it was decided that Cantillon was entitled to a further 16 weeks extension of time. On 22 June 2007, Cantillon commenced a further adjudication claiming loss and expense for each of the periods of 13 and 16 weeks. In respect of the 13 week period, however the loss and expense was claimed on the basis of the costs incurred in a different period to that in which they were actually incurred. In its response Urvasco alleged that the piling should not have taken as long as it did, that the piling work did not actually delay the work as the critical path went through other work, and it contended that as the loss claimed was not in the period of delay it was not a loss that arose as a consequence of the delay and no award could be made in respect of it. The adjudicator concluded that the piling was critical. He then determined a period during which it was critical, which was a different period to that claimed, and then reduced the delay by events for which he considered Cantillon was responsible. Then, using such cost information that was provided in the adjudication, he determined an average weekly cost in respect of loss and expense which he applied to a period of 9.71 weeks for the piling delay. Urvasco refused to accept the decision and alleged in enforcement proceedings that the adjudicator had exceeded his jurisdiction and had failed to comply with the rules of natural justice with regard to his disposition of the 13 week period. They argued that the adjudicator had no jurisdiction to decide a period other than the 13 week period claimed or to determine loss and expense for a period other than that claimed. Urvasco also argued that they had not been given any opportunity to address or adduce any evidence in respect of the costs being incurred in the later period. The judge found that the dispute referred was the loss and expense due in respect of the 13 week extension, but that the defence extended the job of the adjudicator to consider those defences and their consequences. He said that “as the authorities establish that the responding party can put forward any arguable defence in adjudication, whether propounded before the adjudication or not, it must follow that the adjudicator can rule not only on that defence but also upon the ramifications of that defence to the extent that it is successful in so far as it impacts upon the fundamental dispute.” Most interestingly in analysing the authorities, the judge expressed the view that one should look at the essential claim rather than the precise grounds for challenging it and that not only could the responding party make any defence but the claiming party also is not limited to the arguments put forward by it before the dispute crystallised, and further that the adjudicator can consider any argument or evidence for or against the disputed claim in resolving the essential dispute. In the final analysis, the judge upheld the adjudicator’s decision because he concluded that the adjudicator was quite properly determining the dispute with reference to the cases made by both parties and their ramifications. He also concluded that there was no breach of natural justice as it was up to the parties to put in evidence any material they thought fit to address the realistic permutations which might apply and that there had been adequate opportunity so to do. He also noted that the adjudicator had hinted at what he might do before reaching his decision.
CJ-0812
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