Chrissie Parkes and Sam Bawden, from Holmes & Hills’ team of construction solicitors, discuss Adjudications where there are multiple matters of dispute.
The meaning of ‘dispute’ under the Housing Grants, Construction & Regeneration Act 1996 (the ‘Construction Act’) has recently come under fire. Section 108(1) of the Construction Act 1996 states that a party has the right to refer ‘a dispute’ to adjudication. The implication being that an adjudicator has jurisdiction to manage one construction dispute in a single adjudication but not multiple disputes, unless expressly agreed by the parties.
In some cases, defendants have strictly interpreted section 108(1) and have challenged the adjudicator’s jurisdiction to adjudicate on several referrals made in relation to the same dispute. Their argument being that each referral was the subject of a separate dispute and therefore should have been dealt with separately by different adjudicators.
How can you decipher whether there is one dispute made up of sub-issues allowing for one adjudicator or multiple disputes each requiring a different adjudicator?
In the recent case of Quadro Services Ltd v Creagh Concrete Products Ltd, which was a claim to enforce an adjudicator’s decision, the defendant argued that as the dispute referred to the adjudicator concerned three separate payment applications made by the claimant, there should have been three separate adjudications. Consequently, the defendant argued that the decision of the adjudicator in favour of the claimant was not binding as he did not have the jurisdiction to decide on all three payment applications.
HHJ Watson however disagreed stating that although a dispute comprising several sub-issues could be decided separately, it was not prohibited by the Construction Act that they could be decided in the same adjudication. The judge concluded that it did not make commercial sense for sub-issues to be heard separately dragging out litigation unnecessarily. Not least because the purpose of adjudication is to provide an efficient solution to disputes for the purpose of allowing businesses to resume swiftly without lengthy and expensive litigation.
In the 2011 case of Witney Town Council v Beam Construction (Cheltenham) Ltd, the interpretation of section 108(1) was extended to include several referrals made under the same title of dispute but with a less obvious related theme than in Quadro v Creagh. In that case, the dispute comprised an alleged repudiatory breach, an underpayment, and a disagreement over which final account took precedence.
The claimant (Witney Town Council) argued that there was not one, but four disputes that had been referred for adjudication, and therefore contended that the adjudicator lacked jurisdiction to decide the case. Despite their objection, it was held by Mr Justice Akenhead that there was in fact one dispute made up of several different issues, and consequently the adjudicator did have jurisdiction to decide on this case. The decision was therefore upheld.
Contrastingly, in Deluxe Art & Theme Ltd v Beck Interiors Ltd, following a disagreement as to whether two adjudications heard by the same adjudicator were one single dispute, it was held that there were in fact two separate disputes, not one. The deciding factors for there being two separate disputes were: (1) the claimant sub-contractor clearly considered that there were two disputes hence commencing a separate adjudication; (2) the issues disputed in each were not of the same nature (despite both concerning retention funds); & (3) one claim could easily be decided without the other claim and were hence not part of the same dispute.
These cases beg the question: how do you decide if you have multiple separate disputes or whether you have a single dispute comprising several sub-issues?
The overarching conclusion that can be taken from the case law is that this is a question of fact for each case. Furthermore, if the claimant submitted each issue to adjudication separately, a judge is likely to conclude that the claimant itself perceived the issues as separate disputes. If there is a clear link between several claims and/or if one claim is reliant on the decision of another (or several other) claims, then there is likely to be one single dispute, not multiple disputes; the rivers must all flow into the same sea. In other words, there must be a clear flow of one issue to the next to be deemed as similar enough to be categorised under the same heading of dispute.
The above conclusion and distinction is an important one to grasp. It means that, should a party successfully argue that several issues raised by a claimant were in fact distinct disputes, the adjudicator’s decision could be open to scrutiny in further litigation. It makes commercial sense to get these procedural elements of adjudication right before referring one, or several, “disputes” to an adjudicator. Knowing whether or not you can converge several issues into one dispute will save time, money, and unnecessary disappointment.
Holmes & Hills’ team of expert construction solicitors regularly advise and represent clients in serving, enforcing, and defending Adjudication claims. Holmes & Hills solicitors’ team is available to provide strategic, commercial, and pragmatic legal advice allowing you to make informed decisions, as well as representation that ensures your legal and commercial interests are protected.