Kier Regional Ltd (t/a Wallis) v City & General (Holborn) Ltd [2006] EWHC 848 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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

An alleged error by an adjudicator to consider evidence submitted by one of the parties will not invalidate the enforceability of the decision made by the adjudicator.  This case provides a useful reminder that the adjudication system subordinates the need to have the “right” answer to the need to have an answer quickly.

Mr Justice Jackson – Queen’s Bench Division, Technology and Construction Court

In November 2001, Kier agreed to carry out refurbishment and rebuilding works for CG.  The Contract Administrator was AYH Plc.  A number of delays and problems arose during the course of the works for reasons which were in dispute between the parties and which generated a number of adjudications.  In Adjudication No.2, Kier was awarded a 28-week time extension (in addition to the 31-week extension that had previously been granted by AYH).  Kier made an application to AYH for loss and expense totalling £1,330,012 based on contract preliminary rates in respect of the period for which it had received the extension of time under Adjudication No.2.  AYH refused to award Kier any monies in respect of this 28-week time extension in its interim certificate. 

Kier launched Adjudication No.3 requesting that the adjudicator make a decision as to whether it was entitled to loss and/or expense in the sum of £1,330,012.  CG vigorously defended the request and appended to its Notice of Response two expert reports in support of its arguments.  Kier invited the adjudicator to ignore the experts’ reports as these submissions constituted new evidence that it had not had the opportunity to consider in any detail.

The adjudicator decided to disregard the expert reports, on the basis that they were new evidence not known to the parties at the time when the dispute crystallised and awarded Kier £1,246,487.40 (Kier had already received £527,192, therefore the balance payable by CG was £710,295.40) in respect of its loss and expense for the period for which it had received the 28-week extension of time. 

CG took the view that the Adjudicator’s decision was unlawful and therefore refused to make the payments which had been ordered.  Kier launched an application for summary judgment to enforce the adjudicator’s award.  The key issue before the court was whether the adjudicator’s refusal to consider the two expert reports caused his decision to be invalid.

Mr Justice Jackson reached the conclusion that he did not need to reach a definitive answer on whether or not the adjudicator was wrong to not take the two expert reports into account.  Even if the adjudicator had erroneously failed to consider the reports, this alleged error was not one that would invalidate his decision.  The possibility of such error is inherent in the adjudication system and is not a ground for refusing to enforce the adjudicator’s decision.  Accordingly, the adjudicator’s decision must be enforced.

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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