Construction Adjudication Cases: Part 5 of 2020

1) Jurisdiction - Failure to Exhaust: Field Systems Designs Ltd v M W High Tech Projects UK Ltd [2020] CSOH 17 The pursuer, Field, sought to enforce an adjudicator’s award in its favour. The defender, MWH, opposed enforcement on the grounds that (a) the adjudicator had failed to consider a material line of defence and had thus failed to exhaust his jurisdiction and (b) having failed to consider the material line of defence had thus failed to give adequate reasons for his decision. Field was engaged by MWH for the design and installation of controls and instrumentation at a waste plant. The sum in dispute in the adjudication had been over £1.05m, a small part of which (some £26,000) concerned Field’s application for payment for work carried out by two companies, claimed on an hourly rates basis. In the adjudication, MWH argued that the two companies had been Field’s sub-contractors, which under the terms of the contract meant their work should have been valued on a cost plus basis which produced a lower figure than that claimed by Field. In response, Field said the two companies were joint venture partners and, accordingly, the hourly rates basis was correct. There was a hearing before the adjudicator at which MWH went further and said that if the two companies were indeed joint venture partners as Field claimed, then neither of the rates in the contract applied and their works should be valued at nil resulting in a total deduction of £890,000. There were some 25 valuation issues dealt with by the adjudicator, 2 of which concerned the claim for payment for the work of the two companies.

In respect to those 2 valuation issues, the adjudicator decided the works of the two companies were to be valued on the hourly rates basis. He found that certain deductions should be made from the sums claimed for the two companies, of some £15,000 in round figures. In his award he did not expressly address the issue whether the two companies were subcontractors or joint venture partners and therefore the contention that their works should have been valued at nil. He did, however, say that he had considered all the arguments and submission put forward. The court looked at two authorities concerning the circumstances in which a failure by an adjudicator to consider an issue in an adjudication would prevent enforcement[6]. It was clear from Pilon and later cases that a distinction was drawn between a deliberate and an inadvertent failure. The latter would not ‘ordinarily’ render a decision unenforceable. Whilst the decision in Whyte and Mackay was to refuse enforcement as a result of an inadvertent mistake, Coulson on Construction Adjudication’ (4th edition) suggested that that decision should be confined to its own facts. The adjudicator’s decision did not contain a clear or discrete reference to the sub-contract/joint venture point. Though the matter was very finely balanced, a review of the adjudicator’s decision lead to the conclusion that consideration of the point must be implicit in his findings. The court would hold there was a failure to exhaust jurisdiction only ‘in the plainest of cases’[7]. Ultimately, MWH had not established that the adjudicator had failed to address the point. [6] Pilon Ltd v Breyer Group plc [2010] EWHC 837 (TCC); Whyte and Mackay Ltd v Blyth & Blyth Consulting Engineers Ltd [2013] CSOH 54 [7] DC Community Partnerships Ltd v Renfrewshire Council [2017] CSOH 143

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