Quietfield Ltd v Vascroft Construction Ltd [2006] EWCA Civ 1737

This summary was provided by CMS Cameron McKenna LLP.

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

Lord Justices May and Dyson, Lady Justice Smith DBE – Court of Appeal

Section 108(3) of the Housing Grants, Construction and Regeneration Act 1996 and paragraph 23 of the Scheme for Construction Contracts provide for the temporary finality of an adjudicator’s decision.  Paragraph 9(2) of the Scheme obliges an adjudicator to resign where the dispute is the same or substantially the same as one which has previously been referred to adjudication, and a decision has been taken in that adjudication.

This case looks at how these provisions aimed at preventing an adjudicator re-hearing the same or substantially the same dispute interrelate with a usual provision in a construction contract allowing a contractor to make successive applications for extensions of time.

Quietfield engaged Vascroft as contractor to carry out works pursuant to a JCT 1998 contract.  Clause 25 of the conditions allowed Vascroft to make successive applications for extensions of time for ‘Relevant Events’. The works were delayed and disputes arose, resulting in three adjudications. 
Adjudication No. 1 related to Vascroft’s claims for extensions of time advanced in two letters. The adjudicator rejected its claims on the basis it had failed to discharge the burden of proof to establish the extension of time.

In Adjudication No. 3 Quietfield sought liquidated damages for Vascroft’s failure to complete on time. Vascroft contested this, relying on a new document that set out numerous causes of delay and identified the critical path. The adjudicator refused to consider the new document on the grounds he was bound by his decision in Adjudication No. 1. 

Quietfield applied for summary judgement to enforce its award in Adjudication No. 3. The question before the TCC was whether the adjudicator in Adjudication No. 3 was right to ignore the new document.
Jackson J dismissed Quietfield’s application and held:

  • where the contract allows successive applications for extensions of time on different grounds, either party can refer the decisions to successive adjudications;
  • if the contractor makes successive applications for extensions of time on the same grounds, the architect/contract administrator is likely to reject the application. This decision cannot be referred to successive adjudications in light of the relevant provisions in the Act and Scheme (see above);
  • a contractor may not rely on its claim for an extension of time as a defence to a claim for liquidated damages where this claim has been considered and rejected in a previous adjudication;
  • that Vascroft’s extension of time claim in Adjudication No.3 was substantially different from its claims in Adjudication No. 1 and that the adjudicator had breached the natural justice rules by refusing to consider the new document.

Quietfield appealed. The Court of Appeal dismissed its appeal, agreeing with Jackson J’s reasoning. The key points of the judgment are as follows:

  • More than one adjudication in respect of a dispute is permissible but a second adjudicator cannot decide that which the first adjudicator had already decided (paragraph 9(2) of the Scheme);
  • Grounds for an extension of time not individually established in an earlier adjudication could legitimately be submitted in a successive adjudication in conjunction with new grounds, due to being on a critical path affected by those new grounds. This is because such a composite claim might legitimately be seen as outside the dispute in the earlier adjudication; 
  • The key question in the case of successive adjudications is “what did the adjudicator decide in the first adjudication?”. Parties should look at the decision in the first adjudication and the related Notice of Adjudication to determine what the adjudicator decided; 
  • Whether dispute A is substantially the same as dispute B is a question of fact and degree;
  • A contractor cannot make successive applications based on the same material circumstances with the same cause/s of delay or the same Relevant Event as previously made under the contract. A contractor must present some new supporting material that could reasonably lead the architect to a different conclusion. This does not necessarily mean relying on a different Relevant Event but requires materially different particulars of the expected effects and/or a different estimate of the expected delay to completion;
  • Where the only difference between disputes relating to extensions of time is that the later adjudication makes good shortcomings of the earlier adjudication, the disputes are likely to be considered as the same by an adjudicator.
  • In this case the dispute referred and the dispute decided in Adjudication No. 1 was Vascroft’s entitlement to an extension of time in its two letters. In Adjudication No. 3 the new document identified a number of new causes of delay not mentioned in the two letters. The dispute was therefore substantially different from that in Adjudication No. 1 and the adjudicator was wrong not to consider the new document. 

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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