Vertase FLI Ltd v Squibb Group Ltd [2012] EWHC 3194

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(1) Where an adjudicator has determined an issue in dispute between the parties, the adjudicator is not then entitled to reconsider the same issue in a separate adjudication. (2) To the extent that the subsequent decision relies upon the adjudicator’s change of mind in relation to an issue he decided in the earlier adjudication, the subsequent decision will be unenforceable. In this case, the issue of whether the main contractor was entitled to liquidated damages from his sub-contractor where he had not incurred an equivalent liability to the Employer arose in two separate adjudications and the adjudicator’s change of mind on the issue in the second adjudication rendered that decision unenforceable.

Technology and Construction Court, Mr Justice Edwards-Stuart.


In September 2011, Vertase entered into a sub-contract to engage Squibb to provide plant, labour and temporary works resources for the removal of asbestos and the demolition of existing structures at the former Leamington Foundry.

A dispute arose between the parties in respect of Squibb’s claim for an extension of time and Vertase’s entitlement to liquidated damages. The dispute was the subject of two adjudications.

In Adjudication No. 1, Squibb claimed an extension of time for the full period of delay to 27 April 2012 and sought payment for consequential loss and damage in excess of £550,000.  In response Vertase contended that Squibb was entitled to an extension of time until 5 February 2012 but was entitled to nothing in respect of loss and expense. In addition, Vertase claimed £180,000 in respect of liquidated damages. The Adjudicator determined that Squibb was entitled to an extension of time until 9 March 2012 and ordered Vertase to pay Squibb £167,501. He declined Vertase’s claim for liquidated damages. In his decision, he said:

“disregarding any decision I might make in respect of extension of time, Vertase did not issue any withholding notice compliant with either the contract or the Housing Grants, Construction and Regeneration Act 1996…..  Squibb also assert that Vertase have no entitlement to liquidated damages on the ground that no liquidated damages have been withheld from them or claimed from them under the main contract. iI find that Vertase have no entitlement to take liquidated damages from any amount that I might decide is due to be paid to Squibb.”

Vertase refused to pay and Squibb applied, successfully, to the Court for the decision to be enforced. 

The same adjudicator was appointed in Adjudication No. 2.  In that adjudication, he ordered Squibb to pay Vertase the sum of £184,813 plus the Adjudicator’s fees and expenses. In his decision, the Adjudicator said:

“In my Decision in the first Adjudication, I found that Squibb should not be liable for liquidated damages because Vertase had not issued a valid notice of withholding compliant with the Housing Grants, Construction and Regeneration Act 1996…..  I also considered whether Vertase had any right to demand payment of liquidated damages without demonstrating an equivalent loss through the main contract. Vertase have not done this, and the evidence suggests that no liquidated damages have been taken from Vertase under the main contract. Vertase assert that they have a right under the sub-contract to be paid liquidated damages whether or not a similar loss has been suffered under the main contract. Liquidated damages are intended to represent a true estimate of the risk of loss to the Employer (or main Contractor) in the event that the Contractor (or Sub-Contractor) defaults on his obligations under the contract. In this case, no loss has been demonstrated by Vertase, but I am persuaded by Vertase's arguments on the legal position sufficiently to change the view that I took in my Decision in the first adjudication. I find that Squibb have not established that the liquidated damages provision in the contract is unenforceable on the ground that Vertase have not demonstrated a loss under the main contract or from any other reason.”

Vertase commenced court proceedings to enforce the award in Adjudication No 2. Squibb agreed to pay the whole of the award except for a sum of £105,000 which reflected the Adjudicator’s decision in respect of liquidated damages.  Vertase argued that the words in italics above in the Adjudicator’s award in Adjudication No 1 were a continuation of the Adjudicator’s summary of the argument being put forward by Squibb and that he had rejected Vertase’s claim for liquidated damages only on the ground of a lack of withholding notice.


The Court was asked to address the following questions:

  • What did the Adjudicator decide in Adjudication No. 1?
  • Was he being asked to determine the same issue again in Adjudication No. 2?
  • Was the Adjudicator entitled to change his mind?


The Court held that:

  • In the italicised passage quoted above the Adjudicator was expressing his own view and not summarising a submission by Squibb. This conclusion was reinforced (albeit weakly) by the fact that there was no passage in Squibb's submissions during Adjudication No 1 that reflected the wording used by the Adjudicator in the italicised passage, which tended to suggest that it was his own view that he was expressing.
  • These considerations, when taken with his reference in the second Decision to changing the view that he took in the first Decision, led to the conclusion that the Adjudicator's finding in Adjudication No 1 that Vertase had no entitlement to deduct liquidated damages was a finding based on both the want of a withholding notice and the absence of any liability under the main contract.
  • It followed from the above that in Adjudication No 2 the Adjudicator purported to change his mind about a finding made in his first decision. Since that initial finding was final and binding on the parties until finally determined by litigation or arbitration, it was not open to the Adjudicator to change it: and since the parties were bound by his decision in Adjudication No 1 that the absence of any loss in respect of delay precluded Vertase from claiming liquidated damages, that conclusion  remained one with which the parties were bound to comply, until it was finally determined by litigation or arbitration. It mattered not whether the decision was right or wrong.
  • For these reasons, Vertase's application to enforce the decision in Adjudication No 2 failed and was dismissed.

This summary was provided by CMS Cameron McKenna LLP.

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