R. Durtnell & Sons Ltd v Kaduna Ltd [2003] EWHC 517 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

A dispute cannot arise before an independent third party who is asked to decide an issue has reached his decision. A party would not be penalised for raising a jurisdiction point in enforcement proceedings unless it had knowingly elected not to raise it in the Adjudication.

Judge Richard Seymour QC, Technology and Construction Court

19 March 2003

D undertook building work for K under a JCT 80 contract including amendment 18. Various disputes arose, some of which D referred to adjudication. The Adjudicator awarded D an extension of time and release of liquidated damages for loss and expense that had been withheld by K.

K did not pay the whole sum awarded. D sought summary judgment for the amount outstanding. K argued that the Adjudicator had exceeded his jurisdiction by dealing with extension of time and payment of damages for loss and expense because these had been referred to the Architect for a decision and so at the date of the Adjudication, no dispute had arisen in relation to the extension of time sought. K also argued that on the proper construction of the Notice of Adjudication, the claim for an extension of time as dealt with by the Adjudicator was not contained in the Notice. As a result, K said the award in relation to prolongation costs and payment of liquidated damages fell away, as did the extension of time awarded. 

D disputed this and also stated that it was too late to raise the jurisdiction point as K had not raised it during the adjudication proceedings. In any case, by accepting half the decision, K was effectively accepting the whole decision; K could not pick and choose which parts to accept. Finally, K had waived any objection to jurisdiction in correspondence in which it insisted that D's current valuation must conform with the Adjudicator's decision on prolongation.

D's claim for the outstanding sum failed. The court held that no dispute had arisen with respect to the extension of time. It was not for the Employer to decide if an extension was due, but for the Architect. A dispute could not arise in advance of the Architect's decision being made, or the elapse of the time allowed for the decision to be made.  Therefore, the Adjudicator had no jurisdiction to determine the extension of time (and consequent loss and expense), and consequently to award the release of withheld liquidated damages. 

K would not be penalised for failing to rely on the jurisdiction point unless he had knowingly elected not to raise the fact that the Adjudicator had decided something not referred to him or not in dispute at the time of the notice of referral. K could not have appreciated that its failure to raise the jurisdiction point earlier would be treated as a waiver of the right to do so later. 

Also, while in theory a party could not accept parts of the Adjudicator's decision while rejecting others, this did not apply here. The decisions from which K benefited related to different disputes from those in respect of which K sought to challenge the Adjudicator's jurisdiction.

A dispute cannot arise before an independent third party who is asked to decide an issue has reached his decision. A party would not be penalised for raising a jurisdiction point in enforcement proceedings unless it had knowingly elected not to raise it in the Adjudication.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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