Construction Case Update - Adjudication - Part 3 of 2018

6. Natural Justice E7 Building Services Ltd v R G Carter Cambridge Ltd 14 The defendant R G Carter Cambridge Limited (“RGCC”) engaged the Claimant E7 Building Services Ltd (“E7”) to carry out mechanical and electrical works. E7 made an application for payment. RGCC referred the matter to adjudication, seeking an assessment of the gross value of E7’s works at the assessment date (adjudication no 1). The adjudicator was entitled to find and found the value of the works to be £2,338,653.33, which was £388,888.81 more than RGCC had paid. The adjudicator had no jurisdiction to order payment to be made. E7 requested payment of the difference between the valuation and the payment to date. RGCC countered by claiming delay damages and contra- charges of £769,201.90. E7 commenced adjudication no 2 seeking a declaration that it was entitled to the outstanding balance based on the valuation in adjudication no 1 and an order for payment. The adjudicator determined that E7 was entitled to the sum claimed. He found contract clause W gave him power to amend the payment notice. He also found contract clause Y entitled him to exclude RGCC’s cross-claim to set-off the money it alleged it was owed of delay and contra-charges. RGCC commenced adjudication no 3 seeking valuation of its claims for delay and contra-charges. The adjudicator dismissed its claim on the basis that it was not made on the right day, as the assessment date contended for by RGCC had not been set as required by the contract. RGCC submitted that the adjudicator had breached natural justice by reaching his decision in adjudication no 2 by reference to two clauses that had not been referred to by either party and in that as a result he had exceeded his jurisdiction. The Court decided that the issues had been fairly canvassed by both parties. The adjudicator had to determine whether the valuation in adjudication no 1 could be used to found a claim for payment as was done in adjudication no 2. E7 had relied on sections 111(8) and (9) of the Act as affording the adjudicator that right. There was no material difference between those sections in the Act and contract clause W, both of which entitled the adjudicator to decide that the sum specified in a notice could be paid, and when it could be paid. The parties had been aware of the relevant material. No breach of natural justice arose from the adjudicator relying on clause W. He had not exceeded his jurisdiction. Likewise on the second issue, for which the adjudicator relied on clause Y, the parties had been well aware of the relevant material in regards to that clause and the matter had been fairly canvassed. There was no breach of natural justice. RGCC had also applied for a stay if the adjudicator’s decision was enforced. The Court decided there were no special circumstances to justify a stay.

Comment This is a further exampleof theCourt upholdinganadjudicator’s right to determine the facts and the law. The adjudicator is entitled to use the materials placed before him and to refer to and rely on provisions of the contract even if the parties have not expressly referred to and or relied on them. What the adjudicator cannot do is to decide the dispute upon a basis that neither party has advanced without first giving them the opportunity to comment on that basis. It is not always easy to appreciate the difference and all these cases are fact sensitive. All that can safely be said is that the courts will strive to uphold a decision made on a rational basis. 7. Stay of execution—effect of allegation of fraud—addition of new (g) to the Wimbledon factors Gosvenor London Ltd v Aygun Aluminium Ltd 15 The claimant Gosvenor London Limited (“GL”) applied for summary judgment in respect of an adjudicator’s decision awarding it £553,958 plus VAT against the defendant Aygun Aluminium Limited (“AA”). The application was resisted by AA on the basis of fraud. AA also applied for a stay of execution. Following the distribution of a draft judgment GL applied to recall and reconsider the findings following further argument, to adduce fresh evidence, and (in the alternative) for permission to appeal. The contract was described as a secondary sub contract for installation only of cladding and associated works at the Ocean Village Hotel Southampton. GL referred a dispute to adjudication under the TECBAR adjudication rules, which rules incorporated the Scheme. No question arose as to jurisdiction nor did AA raise any arguable breaches of natural justice. Ordinarily the decision would be enforced on well known principles. Evidence in support of the applications for summary judgment was contained in a conventional witness statement. It did not and could not have been expected to address the issue of fraud which had not been raised in the adjudication. AA served a defence settled by counsel with three witness statements in response, alleging that a substantial proportion of GL’s award was based on sums fraudulently invoiced. AA contended that the allegations could not all have been raised in the adjudication as much of the relevant information was not available to AA at the time. The details in the draft defence relied on “enormous discrepancies” in the sums invoiced. The Court noted that counsel who settled the pleading was under a professional obligation to obtain specific instructions and to satisfy himself that the allegations were supported by prima facie evidence. Fraud could only be alleged if pleaded so it was proper to serve a defence.


Made with FlippingBook - professional solution for displaying marketing and sales documents online