In this case the court held that (a) where an adjudicator had not been appointed in accordance with the provisions of the adjudication clause in the contract, he lacked jurisdiction and his award was unenforceable; (b) where the Scheme for Construction Contracts applied, there could be two adjudications on the same issue at the same time provided that no decision had been reached in either adjudication.
Judgment Date: 04.08.09
The Technology and Construction Court, Mr Justice Christopher Clarke
Vision Homes Limited (“Vision”) employed Lancsville Construction Ltd (“LCL”) to undertake works in relation to a number of new apartment blocks. LCL and Vision subsequently fell into dispute on a number of matters, including whether or not Vision had validly terminated the contract, non-payment of interim valuations and the effect of de-scoping on Vision’s entitlement to liquidated damages (“LDs”).
On 14 May 2009 LCL issued a Notice of Intention to Refer a Dispute to adjudication concerning the issue of LDs (“LCL’s first Notice of Intention to Refer”). Later on the same day Vision issued their own Notice of Intention to Refer, also relating to the issue of LDs. LCL asked the contractually defined nominating body (the RICS) to appoint X as adjudicator in the adjudication that LCL had commenced. Less than half an hour after making this request, LCL emailed Vision a slightly modified Notice of Intention to Refer (“LCL’s second Notice of Intention to Refer”). The only change consisted of the addition of a claim for a declaration that Vision should pay the adjudicator’s costs. On the same day, Vision had asked the RICS to appoint an adjudicator in the adjudication that Vision had commenced. Subsequently, X accepted nomination in respect of the dispute commenced by LCL (“the X adjudication”) and shortly after that Y was appointed as adjudicator in the adjudication commenced by Vision (“the Y adjudication”). Both adjudications proceeded. The X adjudication found substantially in favour of LCL. Vision challenged the validity of X’s decision for the reasons set out below. Y held his decision back as he took the view that he had no jurisdiction to make his own decision unless X’s decision was declared to be invalid.
Vision contended that X’s decision was unenforceable for the following reasons:
- It was not clear what the decision meant. X’s decision was expressed in idiosyncratic terms (for example, the parties “dumped the Rule book”).
- X lacked jurisdiction because: The Scheme for Construction Contracts (“the Scheme”) applied to the contract between the parties and X had not been appointed in accordance with the Scheme. The Scheme contemplated that the request to the nominating body should follow the giving of notice of adjudication. However, in this case the request to the nominating body preceded the notice of adjudication under which X was acting (as was apparent, it alleged, from the fact that X ordered Vision to pay his costs, which was the last item of redress claimed under LCL’s second Notice of Intention to Refer). X decided something which had not been referred to him. No part of the dispute referred to him included a dispute as to whether or not the contract had been abandoned or left behind (this also resulted in unfairness: because it was not part of LCL’s case, Vision did not have the opportunity of dealing with it). The decision was inconsistent with the agreement of the parties as to what was the basis of the contract.
- X had gone about his task in a manner that was obviously unfair.
- There could not be two adjudications on the same issue at the same time.
Vision also argued that if X’s decision was held to be invalid, Y could still make his decision in the Y adjudication since there should be implied into the contract between the parties a term that time should not run in the Y adjudication between the date of issue and the date of resolution of the present proceedings. Vision submitted that this term was necessary on the grounds of business efficacy, and in particular in order to ensure efficacy of the adjudication proceedings pending under the contract whilst a court challenge was being ruled on. In the alternative, Vision argued that such a term should be implied because it was what the parties must have meant their contract to provide.
The Court found:
- An adjudication decision which is uncertain on its face is unenforceable. However, on the facts of this case X’s decision was not so unclear that no effect could be given to it.
- X had been acting under LCL’s second Notice of Intention to Refer. This was issued after LCL made its approach to the RICS to appoint X. This constituted a failure to comply with the Scheme and meant that X lacked jurisdiction. It was unnecessary to show that Vision had suffered any prejudice from LCL’s failure to comply with the Scheme. The Court cited IDE Contracting Ltd v RG Carter Cambridge Ltd  EWHC 36 (TCC) in support of this finding. The decision in Palmac Contracting Ltd v Park Lane Estate Ltd  EWHC 919 (TCC) was distinguished on the basis that the court in Palmac held that the relevant clause did not stipulate that an application for nomination of an adjudicator had to be made after notice of adjudication had been given. Accordingly, Palmac is no authority for the position under the Scheme.
- An adjudicator has no jurisdiction to vary the basis on which a dispute to adjudication is referred: McAlpine PPS Pipeline Systems v Transco  EWHC 352 (TCC). However, on the facts of this case the reference was sufficiently broad to include all of the matters decided by X.
- On the facts, X had not decided something which was subject to agreement between the parties.
- X had not acted unfairly.
- There could be two adjudications on the same issue at the same time in certain circumstances, specifically (a) where the Scheme applies and (b) where the dispute that the adjudicator has to decide has been previously referred to adjudication but no decision has been taken in that adjudication.
- It was not necessary on the grounds of business efficacy to imply a term into the contract that time should not run in the Y adjudication between the date of issue and the date resolution of the present court proceedings.
Thus the Court gave judgment in favour of Vision, having decided that X had not been properly appointed in accordance with the Scheme. However, this was not a complete victory for Vision since the Court also decided that Y was no longer in a position to make a valid decision either.
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