On 17 June the Branch was once again fortunate to receive a talk by Geoff Brewer of Brewer Consulting. Approximately 27 people were in attendance.

Although Geoff referred to his talk as being on construction and dispute resolution, it more accurately dealt with certain recent legal judgements arising from applications for enforcement of adjudication decisions. He dealt with a number of aspects of these decisions, such as jurisdiction, the question of what a dispute is, withholding, and two or three other matters. What transpired from this eloquent and very well informed talk was that the judiciary appears to be in some disarray on a number of important matters arising out of the enforcement of adjudication decisions.

Take first the question of jurisdiction. It is a commonly accepted principle, and indeed the law that, even if an adjudicator’s decision is manifestly wrong, it is still enforceable unless it contravenes natural justice or was made outside his jurisdiction. In Joinery Plus Ltd. v. Laing Ltd, however, this principle appears to have been qualified when His Honour Judge Thornton declared that when an adjudicator’s decision had been decided by reference to a wrong set of conditions it was a nullity. The link to the existing principle is that the adjudicator’s duty was to decide the referred dispute by reference to the actual construction contract between the parties, and in deciding it by reference to the wrong conditions his error went to ‘the heart of his jurisdiction’. A tenuous link, some might think; and if one were to extend the jurisdiction exception in this way, the door might, we hope, be opened so as to prevent adjudicators’ decisions which were manifestly wrong being enforceable.

It is well known that before an adjudicator can adjudicate there must be a claim and a response (even if the response is silence), which gives rise to the dispute – see the cases of Sindall v. Solland (2002) and Halki Shipping Corporation v. Sofex Wells Ltd.(1998). In the case of Beck Peppiatt v Norwest Holst (2003), the time for completing a final account had not expired; but, since it had been rejected, even prematurely, by the employer, a dispute existed. The head note to the case provides that the word "dispute" within the meaning of the Construction Act should be given its ordinary reading.

Geoff drew our attention to yet another important case dealing with the withholding provisions under the 1998 Act. In the case of Shimizu Europe v. LBJ Fabrications, the contract provided that the amount should be deemed due 28 days from delivery of the invoice. The matter was referred to adjudication, and the adjudicator decided on what the ‘amount due’ should be; but, taking account of the contract, he declined to make an order for payment until delivery of the invoice. Following the adjudication, the contractors submitted their invoice and a few days thereafter notice of withholding was served. The issue arose as to whether a notice of withholding could be served after the adjudicator’s decision determining the amount due. The Court found that it could.

On a question of enforcement Geoff drew our attention to an interesting case decided by His Honour Judge Seymour in March of this year. In R Durtnell and Sons Ltd v Kaduna Ltd the Court held that, in a case where an adjudicator’s decision dealt with distinct disputes, the court can enforce discreet parts of it even though one of the issues decided may have been outside the adjudicator’s jurisdiction. The offending issue in that case arose because the adjudicator had given a time decision, even though at the time of submitting the dispute to arbitration the architect under the JCT contract had not yet made a determination on the point – hence there was no dispute.

A further interesting case decided in the Outer House Court of Session was referred to us by Geoff. It concerned the Scheme payment terms under Sections 109 and 110 of the Construction Act. A difference had to be drawn between the adjudication side of the Scheme (Part 1) and the payment side of the Scheme (Part 2). Where an adjudication contract differed from Part 1 of the statutory Scheme in connection with one or more of the provisions contained therein, then the whole of the provisions of the Scheme were made to apply. It was different where the contract differed from the provisions of the Act in connection with Part 2 (payments). Where a contractual condition differed from Part 2, then only the replacement condition was implied – not the whole of the remainder of that part of the Scheme.

In the case of Hills Electrical v Dawn Construction Ltd, that distinction in the Parts of the Scheme was of considerable significance because the period for payment under the contract was 14 days whereas the Scheme provided for 28 days. One of the other terms of the contract was inconsistent with the payment provisions of the Scheme and the effect of the decision was that, whilst that provision could be replaced, the other provisions remained in force. It was significant because in the intervening period the defendants went into liquidation.

Finally, the case of Galliford UK Ltd. v Market Capital Ltd (May, 2003), a QBD decision, makes interesting reading in so far as it deals with the effect of an adjudicator’s decision. That case determined, somewhat surprisingly, that an adjudicator’s decision does not constitute a legal liability for damages unless the adjudicator’s decision has first been enforced by the Court. This does not seem to me to sit very comfortably with the concept that an adjudicator’s decision is binding on the parties until reversed by a Court or by an arbitration decision. One could justifiably ask when does a liability become a liability?

It would be impossible in this short review to refer to the whole of the information provided by Geoff, which was both interesting and stimulating on a subject which many will feel is exasperatingly uncertain. However, at the end of the talk, the usual suspects were ready with their questions. Francis Miller took issue with the classifications of the various cases referred to under jurisdiction / enforcement; but Geoff convinced us that the cases were capable of being classified under either heading. Peter Horne discussed with Geoff the question of ‘withholding’ and what amounts to a good or bad notice. It was agreed that there was very little, if any, authority on this point. Plenty of case law on the sanctions arising when a notice was not given, but quite what was required by "a notice"? was noticeably absent. Several other questions were discussed.

This was indeed a very rewarding evening and an enjoyable and easy way of bringing us up to date on this difficult subject. Our thanks are due to Geoff for his time and his work.

reported by Roderick O’Driscoll