The following case raised issues in relation to the jurisdiction of an adjudicator; ambush; and severability:

  • Adjudication requires the existence of a crystallised dispute. Will a crystallised dispute arise where the defending party responds to the claimant’s claim by requesting further information?
  • Under the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act), adjudicators do not have the power to extend the 28 day period within which an adjudicator is required to reach a decision. If one party ‘ambushes’ the other party and gives the responding party insufficient time to prepare a defence, will a decision made by the adjudicator within the relevant time-frame result in the adjudicator having committed a breach of natural justice?
  • Where more than one dispute is referred to an adjudicator, when might a court sever the decision and enforce part only of the adjudicator’s decision?

Bovis Lend Lease Ltd v The Trustees of the London Clinic [2009] EWHC 64

The contractor claimed an extension of time, reimbursement of liquidated damages and loss and expenses from the employer.

The employer responded by stating that the contractor’s claim for loss and expense was a new claim based on new expert evidence which the employer had not heard of before, and the employer requested further documents and information from the contractor. Subsequently, the contractor issued adjudication proceedings and the adjudicator made an award in the contractor’s favour in relation to each of its claims. The employer refused to pay.

During enforcement proceedings, the employer raised two key arguments as to why the adjudicator’s decision should not be enforced.

The employer’s first argument: the absence of a dispute

The employer argued that the adjudicator had no jurisdiction to determine the loss and expense claim because no dispute had crystallised between the parties in relation to the contractor’s claim for loss and expense.

The employer contended:

  • case law established that a dispute did not arise unless and until it emerged that a claim was “not admitted”;
  • the employer had asked the contractor for further and necessary information to enable it to consider the contractor’s claim. The employer had not “not admitted” the claim.
  • Carillion Construction Ltd v Devonport Royal Dockyard [2003] BLR 79 supported the employer’s argument. That case held that there was no dispute between the parties where, at the date of the adjudication notice, the defending party was unaware of the breaches of contract which it was alleged it had committed.

When does a dispute crystallise?

The judge set out the propositions of Mr Justice Jackson (as he then was) in Amec Civil Engineering Ltd v The Secretary of State for Transport [2004] EWHC 2339 (TCC), which (on appeal) had subsequently been approved by the Court of Appeal.

Mr Justice Jackson set out the following propositions (amongst others):

  • A dispute did not arise unless and until it emerged that the claim was not admitted.
  • The circumstances in which a claim was not admitted included:
  • an express rejection;
  • discussions from which it was inferred that the claim was not admitted;
  • prevarication which gave rise to the inference that the claim was not admitted; and
  • silence, which gave rise to the same inference.
  • Nebulous and ill-defined claims which:
  • made a sensible response impossible; or
  • invoked a response of silence or an express non-admission

were unlikely to give rise to a dispute.

What is the effect of requesting further information or clarification of a claim?

The judge concluded that, in the light of the Court of Appeal’s approval of the principles of Mr Justice Jackson (set out above):

  • Where a claim for payment was refused or not accepted on the basis that insufficient information had been provided, a dispute would usually have arisen, unless the claim was “nebulous and ill-defined”.
  • The employer’s contention (that insufficient information had been provided) would become part of the dispute which was referred to adjudication. This was the case here.

The employer’s second argument: ‘ambush’

The court noted that:

  • ‘Ambush’ was not a term of art.
  • The parties had properly agreed that the mere fact of an ‘ambush’ by the claiming party in an adjudication did not, in itself, amount to procedural unfairness (which would amount to a breach of natural justice).
  • The real question was whether the responding party had sufficient time to address the issues in the adjudication.
  • If one party behaved badly (e.g. by referring a dispute to adjudication on 24 December, or during the summer holidays when it was known that key personnel of the defending party were all away), the adjudicator could:
  • decline to act on the grounds that justice could not be done; or
  • require the claiming party to agree to extend the 28 day time period within which the adjudicator was required to reach his decision, failing which the adjudicator would decline to accept the appointment

The court found that this was not a case of ambush and that the employer had been given sufficient time to address the issues in the adjudication. The court enforced the adjudicator’s decision.

Could the loss and expense claim be severed from the adjudicator’s decision?

  • In the light of the findings that the adjudicator had jurisdiction and there had not been a breach of natural justice, the question of severability did not arise. However, the judge concluded (obiter) that where (as here) more than one dispute arose, then:
  • If the adjudicator had consciously not given the responding party sufficient time to respond, the adjudicator’s decision would probably not have been severed.
  • However, if the court had determined that the contractor’s claim for loss and expense had not comprised part of the crystallised dispute, then the part of the decision which related to the extension of time claim and the recovery of liquidated damages could have been severed.

The only difficulty would have been if the adjudicator had failed to apportion his fees as between the different parts of the claim. If he had failed to do that, then enforcement of that part of the decision (relating to fees) would not have been made.

Editors’ comments

Employers beware of taking jurisdictional points if a contractor fails to provide information to substantiate its claims. This case demonstrates that the contractor’s failure to substantiate its claims will only be grounds for a jurisdictional challenge if the claim is “nebulous and ill defined”. Mounting a challenge to the jurisdiction of the adjudicator is not the appropriate way to proceed. The employer should simply rely on this fact when defending the claim.

Adjudicators also take note! If more than one dispute arises, it seems prudent to make an award for costs which identifies the costs payable for each of the disputes. If the adjudicator’s decision is then severed, the adjudicator will be able to recover his costs in relation to the enforceable part of his decision.

View: Bovis Lend Lease Ltd v The Trustees of the London Clinic [2009] EWHC 64