ISG Construction Ltd v Seevic College [2014] EWHC 4007 (TCC)

This decision of Mr Justice Ramsey has rightly attracted a lot of comment with respect to the manner in which applications for the nomination of an adjudicator are made. However, the judgment has a number of other interesting features. There had been two adjudications. Siemens submitted that the claims in the Notice of Adjudication (and the Referral Notice) in the Second Adjudication (and so subsequently, the decision), contained a substantial overlap with the claims that had already been made and decided in the First Adjudication. A significant part of Eurocom’s claim in the Second Adjudication related to the value of its work. However the value of the work as at the date of termination on 1 August 2012 had been decided in the First Adjudication and no further work had been done since that date to give rise to a further claim. Most of the claims in the Second Adjudication were not brought on the basis of any new analysis or new material.

Eurocom argued that the Second Adjudication differed in nature from the First Adjudication on the basis that it related either to a new claim for damages or that it was a final account claim as distinct from the interim account claim decided by the adjudicator in the First Adjudication. The dispute referred and decided by the adjudicator in the First Adjudication arose out of Eurocom’s applications for payment prior to termination which Siemens had valued in a negative sum. The First Adjudication was limited to the determination of Eurocom’s entitlement to an extension of time for Siemens’ delay and disruption to Eurocom’s works, to payment under the subcontract for five heads of financial claim and payment for variations for which payment had been claimed and rejected by the date of the First Adjudication. Eurocom said that the dispute referred to and decided by the adjudicator in the Second Adjudication was for damages for Siemens’ breach of contract in delaying and disrupting Eurocom’s work, damages for Siemens’ repudiatory breach of contract in terminating the subcontract and payment for the variations that remained “to be advised” at the date of the First Adjudication. Even if the two decisions did overlap, the areas of overlap should be and could be readily severed.

The principles to be applied in deciding whether an adjudicator is precluded from deciding a claim because of the effect of an earlier adjudication decision were considered in the Quietfield Ltd v Vascroft Construction Ltd decision (see Issue 79).

Mr Justice Ramsey did not accept that here there was a clear distinction between the First Adjudication being based on an interim application, and the Second Adjudication being based on a final account. The adjudicator in the Second Adjudication had allowed sums which overlapped with the decisions made in the First Adjudication. In relation to compensation events, the Judge said that the First Adjudication and the Second Adjudication dealt with the same variation claims. It was not the case that one adjudication dealt with an interim application and the other with a final application. A party who has sought and obtained an adjudication decision dealing with the value of all variations cannot then seek to have another adjudicator determine claims for the same variations by way of a “second bite of the cherry”.

In relation to management costs, the Judge held that in the First Adjudication the adjudicator decided on preliminaries up to 18 September 2011. He then compared the delay claim in the First Adjudication and the delay claim in the Second Adjudication and noted that the grounds for the delay until September 2011 were the same or substantially the same. The management claim was therefore for the same period up to 18 September 2011. Further, it was not possible for the adjudicator in the Second Adjudication to come to a conclusion on this claim without taking account of the decision in the First Adjudication. This meant that any new element could not be severed given the basis of the decision in the Second Adjudication.

In relation to extended working, there was a similar overlap in both the time periods where awards were made and in the figures awarded. With the subcontractor claims, the Judge gave an example of one subcontractor, where the first adjudicator made an award of £2,300 which was the same claim dealt with in the Second Adjudication and allowed in full by the second adjudicator. In doing so the adjudicator in the Second Adjudication sought to make decisions on claims which had already been adjudicated on and he did not have jurisdiction to do so.

Siemens had identified some new claims which it acknowledged did give rise to severable and enforceable parts of the decision in the Second Adjudication (or would have done had the Judge decided that the adjudicator had jurisdiction in the first place), but the remaining heads contained elements of claim which had already been raised and determined in the First Adjudication. The adjudicator in the Second Adjudication did not have jurisdiction to decide those elements. Further as the adjudicator in the Second Adjudication did not make any allowance for the claims decided in the First Adjudication but treated the claims as being new claims in the Second Adjudication, it was not possible to isolate the new elements of claim. It was therefore not possible to sever those elements from the decision in the Second Adjudication and thereby enforce the new elements of those parts of the claims in respect of which the adjudicator did have jurisdiction.