Monday, November 3, 2008

Serial adjudications: Birmingham City Council -v- Paddison Construction

Will a court consider repeated adjudications that rely on the same facts?

Summing upThe case: Benfield Construction Limited -v- Trudson (Hatton) Limited [2008] EWHC 2333 (TCC). The issue: Serial adjudications.The implication: The courts will consider it an abuse of the adjudication process when a party initiates a series of adjudications which, although using different legal arguments, rely upon the same underlying facts.

Multiple or serial adjudications have made the news recently. A couple of weeks ago my colleague, Rob Palles-Clark, reported on the case of Birmingham City Council -v- Paddison Construction Limited, in which the courts held that a referring party may not refer to adjudication a dispute which was the same or substantially the same as considered in an earlier adjudication. That decision was the latest in a consistent line of authority, which has provided a limit to serial adjudications being made by referring parties. In a recent judgement in the TCC, the courts have extended that line of authority to include responding parties.


Serial adjudications: Birmingham City Council -v- Paddison Construction


The case of Benfield Construction Limited ('Benfield') -v- Trudson (Hatton) Limited ('Trudson') concerned the design and construction of two houses in Warwickshire. As seems to be so typical in construction disputes, the works in question were seriously delayed.

Handover form

Following a significant extension of time up to May 2007, Benfield was issued with a certificate of practical completion of the works in August 2008. Nevertheless, in August 2007, agents for Trudson issued a signed handover form, which confirmed that "on the final inspection of this property the works were accepted as complete, subject only to the following items being dealt with in reasonable time". The status of this form was to feature prominently in a series of subsequent adjudications.

In Adjudication No 1, Trudson sought a declaration from the adjudicator that practical completion had not occurred at the date of referral, namely 4 April 2008. In its response, Benfield argued that practical completion had indeed incurred as evidenced by the handover form dated 17 August 2007. The adjudicator rejected this line of defence.

The same adjudicator was appointed in Adjudication No 2 in which Trudson sought payment of liquidated damages for the culpable delays caused by Benfield. In its response Benfield repeated its contention that practical completion was achieved on 17 August 2007 by reference to the handover form. Once more, the adjudicator rejected Benfield's arguments and awarded Trudson the sum of ВЈ75,000 in damages.

By a notice dated 28 May 2008, Benfield initiated a third adjudication. In this notice, Benfield sought a declaration to the effect that Trudson was not entitled to liquidated damages for the period after 17 August 2007 on the basis that Trudson had accepted partial possession on that date and that, according to the provisions of the contract, practical completion was deemed to have taken place on that date. This was a different approach to that adopted in earlier adjudications in which the deeming provisions following partial possession had not been argued. Trudson contended that the adjudicator did not have jurisdiction to address the issues raised by Benfield, as these were the same or substantially the same issues raised and decided upon in earlier decisions. Nevertheless, the adjudicator (who was not the same adjudicator as in earlier adjudications) found that Benfield was entitled to the repayment of the ВЈ75,000 in damages.

The matter of enforcement of the third adjudication came before Justice Coulson in the TCC. He reviewed a series of earlier authorities dealing with possible overlaps between successive adjudications and concluded that enforcement of an adjudicator's decision depended on whether, as a matter of fact and degree, the subsequent dispute was the same or substantially the same as that decided in an earlier adjudication.

No change

After careful analysis, Justice Coulson concluded that the relevant facts in the third adjudication were materially the same as those in the first two adjudications. He noted that the first and third adjudications both considered whether practical completion had taken place on 17 August 2007. Similarly, the second and third adjudications both considered Trudson's entitlement to liquidated damages for the period after 17 August 2007. Justice Coulson said it was difficult to imagine a more obvious case of overlap.

Furthermore, the judge said the courts should be "vigilant to prevent serial adjudications of matters which could and should have been raised first time round". In his view, a defence based upon the deeming provisions following partial possession should have been raised in the earlier adjudications. It was not acceptable for a party to introduce a different legal argument in a later adjudication which was based on the same underlying facts as relied upon in an earlier adjudication. According to Justice Coulson, the courts need to step in to prevent an abuse of the adjudication process in these circumstances.

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