Sudlows brought a part 7 claim against its employer, Global, to enforce a decision of the adjudicator, Mr Molloy. He had ordered Global to pay Sudlows a total of £996,898.24 plus VAT in what was the 6th adjudication between these parties. Global resisted and brought part 8 proceedings for:

(a) a declaration that Mr Molloy acted in breach of natural justice because he wrongly took too narrow a view of his jurisdiction by holding that he was bound by certain findings made by the adjudicator Mr Curtis, in the previous 5th adjudication; and

(b) enforcement of Mr Molloy’s alternative findings awarding Sudlows £209,053.01 plus VAT, interest and fees (if he was found to have been wrong to hold that he was bound by Mr Curtis’s decision).

The proceedings concerned Section 2 of fit-out works of a data hall at East India Docks and specifically the installation from a private substation of high voltage electrical cables by Sudlows in ducting provided by Global. In the 5th adjudication, Sudlows succeeded on its claim that the cables were damaged on installation because the ducting was not fit for purpose and they were justified in refusing to energise the cable to complete the installation, and the ensuing delays were Relevant Events entitling it to an extension of time for that part of Section 2, known as Window 29, which ran from 29 May 2020 to 18 January 2021. They also claimed and were awarded Extensions of Time (EOTs) for earlier delays in Windows 14, 18, 2, in total an EOT of 482 days.

Following that decision, Global omitted the energisation from the contract and the cables were successfully tested and installed by another contractor. Sudlows then brought the 6th adjudication before Mr Molloy claiming further EOT from 19 January 2021 to the date of practical completion on 7 June 2021 together with loss and expense and other sums claimed due upon an interim payment application. Global in defence produced two experts’ reports which said the ducting had been fit for purpose, and denied the claimed entitlement to further time and money. They accepted that they could not reverse the previous EOT awarded by Mr Curtis, but said Mr Molloy was not bound by the findings of Mr Curtis; that Mr Molloy was entitled to consider in relation to this ‘new’ claim whether the further delay was caused by a relevant event (and relevant matters) as alleged, or not.

Mr Molloy had to decide whether the dispute he was being asked to consider was the same or substantially the same as the one decided by Mr Curtis and thus whether he had jurisdiction to hear it. He suggested, and the parties subsequently agreed, to his approaching the dispute by deciding first whether he was bound by Mr Curtis’ findings. If not bound, he could proceed to decide the dispute. If he was bound he would say what decision he would have reached on the merits, had he been free to do so.

In his decision, Mr Molloy took the view that he was bound by the findings of Mr Curtis meaning Sudlows was entitled to a further EOT and loss and or expense and other monies amounting to £996,898.

In case he was wrong about that, he then proceeded to make an alternative finding on the merits in which he decided in light of the new expert evidence that the ducting was fit for purpose and Sudlows was not entitled to refuse to energise the cables. The result was that Sudlows was only entitled to a further 133 days EOT, and were liable to Global in the sum of £209,053.

The court now had to decide two issues.

First issue: The Prior Decision Issue
Was Mr Molloy bound by Mr Curtis’s decision in the 5th Adjudication and to award Sudlows a further 133 days EOT with prolongation and other costs if the relevant events found by Mr Curtis continued to apply. In this case he could not take account of the new expert evidence or assess the matter differently. If he was not bound he could take account of the new evidence. It was common ground that if Mr Molloy was wrong to find he was bound, then that wrongfully narrow view of his jurisdiction would amount to a breach of the rules of natural justice and his primary decision could not be enforced.

Second Issue: The Alternative Finding Issue
If Mr Molloy was not bound by Mr Curtis’ findings, could Global rely on the detailed alternative findings to lead to an enforceable award in its favour?

First issue: The Prior Decision Issue
The law was shortly stated.

S 108(3) of the Act: once a dispute was decided, the decision was binding until the dispute was finally determined by legal proceedings, arbitration or agreement.

Paragraph 9(2) of the Scheme provided that:
“An adjudicator must 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.”

The issue could arise at the outset if an adjudicator was asked to resign; or more commonly on enforcement or a part 8 claim and had been considered in a large number of cases, only a few of which the court found it necessary to refer to . The court emphasised that context was important and that it was both disputes and decisions (i.e. what has been decided) that must be looked at and compared.

Although both the 5th and 6th adjudication concerned the same relevant events, that was plainly insufficient to make the disputes the same. That was because:

(a) they related to underlying EOT’s for different periods of time,
(b) the dispute in relation to the new EOT involved new relevant materials and the event of testing which were not, and could not, have been part of the dispute leading to the prior adjudication, and
(c) this particular issue formed only one part of a much wider dispute between the parties as to the true value of the contract works as a whole, engendered by Sudlows Interim Application for Payment Number 46; the latter was in fact its final payment claim, on the basis that practical completion had by then taken place. In the judgment of the court, elements (a) and (b) alone would have sufficed.

The court held the two disputes were not the same or substantially so and Mr Molloy was not bound by the findings of Mr Curtis in relation to the availability of an EOT for the earlier period.

It was still necessary to turn to Mr Molloy’s decision in relation to his jurisdiction where he found he was bound by Mr Curtis’ decision in material respects. The court was bound to afford the decision due respect. Notwithstanding Mr Molloy’s careful analysis and reasoning consideration he was clearly wrong for the following reasons. First, the cases made clear that the jurisdictional question involved an analysis of what both disputes were about, and whether they were the same or substantially so. Mr Molloy did not apply that test at all.

Second, he failed to give any real weight to the fact that the decision in the 5th Adjudication was as to an EOT for a prior period. Third, he made no reference to the new material adduced before him and which, he considered to be so significant to his alternative finding. This was more than argument; it was new evidence. In consequence he did have jurisdiction, there was a breach of natural justice and his principal decision could not be enforced.

Sudlows contended that if the principal decision fell, enforcement of the alternative decision would require severance, and in this case, it could not be severed as the alternative findings were not part of the decision. The court said that severance was not a relevant consideration here. The alternative findings were just as detailed as the primary findings. There was no point in making them, or the parties agreeing to them being made, if they were not to be regarded as binding if the primary findings fell away.

Mr Molloy had jurisdiction to make the findings. The parties had agreed to his making alternative findings. They constituted a separate decision, even if not referred to in the ‘Decision’ part of his written decision. They were not to be regarded as ‘obiter’ – the convention of precedence did not apply to adjudication since decisions were intended to have temporary binding effect.

The alternative findings were to be enforced.

Comment

Two points emerge. The question whether two disputes are the same or substantially so may require deep analysis and is not always obvious. Here, two disputes featured questions of EOTs over different periods supported by different evidence, yet relied on the same relevant events.

It was the causes of the delay(s) which were at issue. Findings that a particular cause operated in an earlier period did not mean it could not be disputed as being the cause of delay in a later period (even though this involved the benefit of hindsight). Notably here there was fresh evidence and the cause of the earlier delay was not challenged, but was accepted by the previously unsuccessful party. The second point of note is that if the parties agree, the adjudicator can make alternative findings and they are likely to be given effect where the primary decision falls away.

This article was originally written and published on the internet by Kenneth Salmon MCIArb, consultant solicitor at Slater Heelis LLP.

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