If a claim for the same amount of money is made by the same party in two different adjudications, does this count as the same dispute? Not necessarily, as a recent case demonstrates.
A claim for the same sum of money is made by the same party, under a construction contract between the same employer and contractor, in two different adjudications.
Surely this is a case of the same or substantially the same dispute? Not necessarily.
The Court of Appeal’s decision in Brown v Complete Buildings Solutions Ltd  EWCA Civ 1 is a short but helpful reminder of the key questions to be asked in determining if a second adjudicator has jurisdiction to act.
The employer (the Browns) used a JCT Minor Works contract in 2011 to employ a contractor (Complete Building Solutions). The works involved the demolition of a house and construction of a new one. The price was just shy of £500,000.
The contract provided for the adjudication provisions under the statutory Scheme for Construction Contracts. The works were carried out. In 2013 practical completion was certified.
Later that year a certificate of making good defects was issued, followed by a final certificate. The contractor then claimed a final sum due of around of £115,000 by way of letter to the employer. The employer refused to pay, so the contractor went to adjudication.
The adjudicator said the final certificate had not been issued in accordance with the contract and the contractor’s letter, which was based on that final certificate, was not a valid payment notice.
As soon as that decision was issued, the contractor sent a new letter to the employer claiming the sum of £115,000 again, but using the route under the contract where no final certificate has been issued. There was no pay less notice from the employer.
Again, the employer refused to pay and the contractor went to adjudication. This time the employer said the second adjudicator had no jurisdiction to proceed, because this was the same or substantially the same dispute as the first adjudication.
The second adjudicator did not agree and went ahead. The employer didn’t take part. The second adjudicator found the £115,000 was due to the contractor. The employer refused to pay up.
The case came before the court, going all the way to the Court of Appeal. The question being: was the second adjudicator asked to determine the same or substantially the same dispute as the first adjudicator?
This is a well-established concept in adjudication case law. It is also incorporated in the Scheme for Construction Contracts, which requires an adjudicator to resign in such situations.
The contractor argued it had a fresh cause of action following its second letter claiming the £115,000. The employer argued this was only trying to make good the shortcomings in the first letter and that the substance of the two disputes was the same.
The court said the second adjudicator was asked to determine a different issue and it upheld his decision.
The key points of the court’s decision were:
- A decision on whether a dispute is “the same or substantially the same” requires an assessment of both the terms of the first dispute and the actual decision of the first adjudicator. This determines how much or how little remains for consideration by the second adjudicator.
- The starting point in this assessment is the second adjudicator’s view on whether the dispute is the same or substantially the same.
- This will be a question of ‘fact and degree’ and it is important that the court will have ‘due respect’ for the second adjudicator’s decision.
The court said the second adjudicator had not decided the same dispute as the first adjudicator. The second adjudication involved new matters (ie the contractor’s second letter seeking payment). The contractor was relying on the new notice rather than trying to correct the mistakes in its earlier one.
The case law around what is the same or substantially the same dispute is well established. This case underlines those previous principles and is a helpful reminder of some of the wider issues in adjudication:
- A key question is what was the decision of the first adjudicator, as opposed to what was referred? This will determine how much remains for a second adjudicator to decide upon.
- The courts remain keen to enforce adjudicators’ decisions where possible and give them ‘due respect’.
- Jurisdictional challenges are often not successful – think carefully before relying on them as a reason not to take part in an adjudication.
- Payment notices and certificates remain an area to watch – issuing them correctly can avoid a lot of trouble.
Jane Fender-Allison is a senior associate and Anna Savage is a lawyer at CMS