EWHC 729 (TCC)
Following disputes about the final account and contra-charges, there were two separate adjudications. Following the first, Enterprise were required to pay £1.8m; in the second, the adjudicator made a declaration as to the proper valuation of the works allowing for contracharges. The result of the second decision meant that at least part of the sums due under the first decision should be repaid. Both parties argued that the decision where they had lost, was invalid. Mr Justice Akenhead considered how a court should deal simultaneously with two adjudications which decide different things but which might impact upon each other. He noted that, provided both decisions are valid:
- It is necessary to consider if, both are capable of being enforced or given effect to; if one or other is not so capable, the question of set-off does not arise;
- If it is clear that both are so capable, the courts should give effect to them both, provided that separate proceedings have been brought by each party to enforce each decision. There is no reason to favour one side if both have a valid and enforceable decision in their favour;
- How each decision is enforced is a matter for the Court. It may be wholly inappropriate to permit a set-off of a second financial decision, as such, in circumstances where the first decision was predicated upon the basis that there could be no set-off.
The Judge also considered the approach to "kitchen sink" adjudications, where the dispute is so extensive that an adjudicator or defending party cannot readily or easily deal with it in the standard adjudication period. The Judge said the courts should have regard to:
- Whether and if so upon what basis the adjudicator felt able to reach his decision in the time available;
- In terms of the opportunity available to the defending party, the court should look at the opportunities available to that party before the adjudication started to address the subject matter of the adjudication and what that party was able to and did do in the time available in the adjudication to address the material provided to it and the adjudicator.
In the first adjudication, Enterprise argued that the decision was unenforceable because the adjudicator failed to address the merits and make findings in relation to the contra-charges which it had put forward. However, on review of the decision, the Judge noted that the dispute referred included the assertion that as there were no or no effective, withholding notices, the amounts withheld from the contracharges were not properly withheld and were duly payable by Enterprise. As a matter of logic, if that primary case was upheld, there was no need for the adjudicator to consider the alternative case as put forward by Enterprise. This was exactly the view expressed by the adjudicator. Mr Justice Akenhead said that:
"it cannot be incumbent upon an Adjudicator, at least generally, to include in his or her decision a commentary let alone findings upon every issue which arises in the reference, save to the extent that it is necessary to provide reasons and explanations for what he or she does decide"
In the second adjudication, it was suggested that the adjudicator failed to act fairly and/or apply the rules of natural justice, in part this was because of the extent of the adjudication. However, Mr Justice Akenhead (reaching a similar view to that of Mr Justice Coulson in the Dorchester v Vivid case, see issue 104) noted that it was clear the adjudicator himself did not ultimately consider that he needed more time in which to produce his decision. In his decision, the adjudicator averred to the fact that his job had been onerous but he had been given a week's extension of time and did not ask for more.
The Judge also noted that the adjudicator was provided with extensive evidence and argument by each party in relation to the valuation of final account and contra-charge items. The parties had conveniently sub-divided the disputed items into categories and in respect of each separate category, the adjudicator took account of the parties' representations and depending on the volume of supporting documentation either checked all the information or in the case of a large disputed item carried out a series of spot checks. Bearing in mind the tight adjudication timescale, the adjudicator's approach could not be criticised.
Thus both decisions were valid and enforceable. On balance, the Judge considered that his order should reflect the net effect of the decisions. Calculating the net effect would include taking account of the interest position in relation to the payment (or non payment) of the respective adjudicator's decisions and costs.