A recent TCC decision has considered whether the misinterpretation or mistaken application of a prior adjudicator’s decision will invalidate a subsequent adjudicator’s decision. The judgment builds on a Court of Appeal case decided earlier this year. It will be of particular relevance to disputes where liability and quantum issues are separately referred to adjudication, as well as serial adjudications more generally.
Amey Wye Valley Ltd v Herefordshire District Council
Serial adjudications between the same parties can often arise, particularly in complex disputes. They require careful consideration of (i) what exactly is referred to subsequent adjudicators, to avoid a lack of jurisdiction from referring the “same or substantially the same” dispute and (ii) what the subsequent adjudicators decide, in case they re-visit already determined issues and make their own decisions unenforceable. This case concerned two adjudications and whether the second decision was unenforceable.
Herefordshire District Council (“HDC”) and Amey entered into a contract for repair and maintenance works to the highways and roads of Herefordshire over a 10 year period. A dispute arose over the correct adjustment for inflation purposes of sums to be paid under the contract. The dispute was referred to adjudication by Amey (the “First Adjudication”).
The adjudicator was asked to decide how these adjustments should be carried out, without applying those findings to actual financial consequences. He did so, but after the decision the parties failed to reach an agreement on the financial consequences which flowed from that. As a result Amey referred a further dispute to adjudication (the “Second Adjudication”) asking the second adjudicator to put monetary findings to the first adjudicator’s decision.
The adjudicator in the Second Adjudication went ahead and decided that there had been a substantial overpayment to Amey and that this amount (some £9.5 million) should be repaid to HDC. Amey challenged the enforceability of the decision in the Technology and Construction Court by arguing (amongst other things) that:
- The second adjudicator had misinterpreted the first adjudicator’s decision and had therefore strayed beyond his jurisdiction, as the first decision was binding on him;
- The second adjudicator had made calculation errors (agreed between the parties to be an error, amounting to at least £2 million) and had therefore gone beyond his jurisdiction by inaccurately carrying out the calculations required by the first decision.
The right answer or a rapid answer?
The court rejected Amey’s primary contention that an adjudicator would act outside his jurisdiction by making errors in the application of a prior adjudication decision. Provided that the second adjudicator was resolving the dispute referred to him and not re-deciding something that was not before him (because it had already been decided by the first adjudicator), then he had jurisdiction to determine the dispute, whether he made mistakes in doing so or otherwise.
The court also emphasised the importance, in light of the Court of Appeal’s decision earlier this year in Brown v Complete Building Solutions (see our Law-Now on that case here), of taking the subsequent adjudicator’s own view as the “starting point” for whether the dispute before him was the same or substantially the same as one decided by a prior adjudicator. In this case the second adjudicator had made it clear that he was not attempting to re-decide any issues decided by the first adjudicator.
The court also declined to sever that part of the second adjudicator’s decision which contained a calculation error of at least £2 million in HDC’s favour. This was despite the error being accepted as such by both parties. Given the second adjudicator had jurisdiction, the court said to do otherwise would be contrary to the law regarding enforcement of adjudicators. It also stressed that “absolutely no criticism can or should be levelled at [the second adjudicator] in respect of this error… Errors of fine detail are part of the process effectively accepted by Parliament as a consequence of the process of adjudication. The ‘right’ answer is secondary to the parties having a rapid answer… Adjudicators are not expected to be perfect”. This is a well-established approach taken by the courts – and one which will be encouraging to adjudicators, albeit less so to the parties.
Conclusions and implications
This decision provides a further example of the complexities posed by serial adjudication, which have been before the courts on a number of occasions over the past two years. The decision suggests that adjudicators will be given significant latitude in interpreting and applying prior adjudication decisions between the same parties in subsequent adjudications. As foreshadowed in our previous Law-Now on the Court of Appeal’s Complete Building Solutions decision (click here), the requirement for the starting point to be the second adjudicator’s view as to the scope of his jurisdiction appears to provide added support for a lenient approach.
This decision can be compared with previous TCC cases in which decisions of subsequent adjudicators have been struck down as trespassing on matters already decided by prior adjudicators. For example, the third adjudicator in Benfield Construction Ltd v Trudson (Hatton) Ltd considered himself to be determining different issues to those decided by a prior adjudicator because new issues had been raised not previously dealt with. There the court found the overall dispute to be the same. It may be open to question whether greater latitude should now be given to adjudicators in such disputes in light of the present decision and Complete Building Solutions.