Court of Appeal establishes guidance on the ‘binding’ nature of former adjudication decisions

This case review was co-authored by Nikita Singh, Trainee Solicitor, London.

The Court of Appeal set out clear guidance on interpreting how ‘binding’ a previous adjudication decision will be going forwards in the context of serial adjudications issued pursuant to the Housing Grants, Construction and Regeneration Act 1996 (Construction Act).

Background

This case involved two separate adjudication decisions, Adjudication 5 and Adjudication 6, relating to extensions of time. Although Mr Molloy, the adjudicator in Adjudication 6, considered that the decision of Mr Curtis in Adjudication 5 was binding pursuant to Hyder v Carillion [2011], he ultimately handed down a different decision after reviewing the emergence of new evidence from Global Switch Estates 1 Ltd (Global Switch).

Global Switch argued that the extension of time in Adjudication 6 was substantially different to the claim in Adjudication 5 as it related to a different time period. In the initial ruling in the Technology and Construction Court (TCC), Mr Justice Waksman agreed and reinforced the subsequent decision. Sudlows Ltd (Sudlows) appealed.

Court of Appeal decision

Lord Justice Coulson commented on the difficulty with serial adjudications and reconciling repeated references of disputes under the same contract with the fact that adjudication should be used as a quick, one-off event.

This was summarised by Lord Justice Coulson as follows: “Put more shortly, it is harder to adhere to the principle of ‘pay now, argue later’ when you are constantly arguing now.”

The judgment underlined four central principles that should be considered in instances where several differing disputes overlap:

• The need for speed and temporary finality mean that the adjudicator, and the court if necessary, should be encouraged to give a robust and common sense answer to any issue of overlapping disputes.
• The first adjudicator’s decision needs to be assessed to see if the second adjudicator has compromised an earlier decision.
• There needs to be an element of flexibility to prevent a party from re-adjudicating something that has already been decided but also to make sure that a potential new claim or new defence is not shut out completely.
• As a rule, the courts should be slow to interfere with adjudication decisions unless they are clearly wrong. Excessive intervention of the courts would risk undermining the adjudication process.

Lord Justice Coulson concluded that Global Switch’s contractual responsibility for the ‘cabling and ductwork issues’ raised was binding on the two parties and binding on future adjudicators.

Any alternative result would have been inconsistent with Mr Curtis’ binding decision. Sudlows were “quite right” to argue that the delay claim in Adjudication 6 was the follow-up extension of the decision in Adjudication 5. There were no other competing relevant events, and no “new narrative”. The alternative result in Adjudication 6 ignored the “essential reasoning” in Adjudication 5.

Comment

This case was unusual; disputes about delay usually span across the effects of different competing relevant events and their consequences. In this case however (as held in both adjudications), it was agreed that there was only one cause of relevant delay. Consequently, the extension of time fell into the same dispute.

The first adjudicator’s view as to Global Switch’s contractual responsibility for the cabling and ductwork issues was binding on the parties and binding on any subsequent adjudicator.

This case highlights that a party may not be able to raise new arguments or evidence in a new adjudication if it wishes to reach a decision which compromises what has already been decided.

Parties should be wary of evading the question of the fundamental dispute between the parties decided in an earlier adjudication and any evidence raised at the time.

Moving forward, there will likely continue to be disagreements between parties as to the meaning of what has been decided in a previous adjudication. However, this judgment is important as it provides welcome guidance on how to approach these issues.