Withdrawal of referral—right to refer same dispute to adjudication— power of court to grant injunction to restrain second
adjudication—whether second adjudication unreasonable or oppressive—award of wasted costs
See Jacobs UK Ltd v Skanska Construction UK Ltd28
Jacobs claimed an injunction to restrain Skanska from proceeding with an adjudication,
following Skanska’s withdrawal from an earlier adjudication in respect of the same or
substantially the same dispute. The material question was whether a party to adjudication was
entitled to withdraw a dispute from adjudication and then refer the same, or
substantially the same, dispute to a second adjudication.
Skanska had engaged Jacobs in around February 2011 to provide design services in respect of a PFI
project for the design and replacement of street lighting in Lewisham and Croydon. There was a
dispute about the adequacy of the services.
The contract was a construction contract for the purposes of section 108 of the Act and
contained an adjudication provision.
On 8 February 2017 Skanska gave notice of an intention to refer the dispute to
adjudication (Adjudication No.1). Concerns were raised as to whether the adjudication
agreement complied with the Act and in face of jurisdictional challenges, the parties reached
agreement to appoint Mr Patrick Waterhouse as adjudicator, that the Scheme would apply and as to
a timetable and recorded it in writing.
Mr Waterhouse was duly appointed. Referral and response documents were served in accordance
with the agreed timetable. However, Skanska’s counsel became unavailable and it was unable to
serve its reply by the due date (as agreed). Skanska requested an extension of time but
Jacobs refused the request and the adjudicator declined to grant an extension of time unless both
parties agreed.
Skanska thereupon withdrew its reference to adjudication and invited the adjudicator to
resign and eventually he did so.
Ten days later on 21 June 2017 Skanska gave a fresh notice of intention to refer the
dispute to adjudication. This second notice (Adjudication No.2) contained substantially the
same claims as the first save that one of the claims was withdrawn, the scope of the
dispute narrowed, and methodology and quantum of damages was revised.
On 4 July 2017 Jacobs commenced Part 8 proceedings seeking a declaration that Skanska was
acting unlawfully in proceeding with Adjudication No.2; for an order restraining Skanska from
taking any steps in furtherance of Adjudication No.2; and requiring Skanska to withdraw it. They
also sought a declaration that Jacobs was entitled to its wasted costs of Adjudication No.1.
Jacobs’ case was that Adjudication No.1 should have been conducted in accordance with the agreed
timetable. It had a right to a resolution process fair to both parties and which did not confer an
uncovenanted advantage on the referring party. It invited the court to protect its right to a
procedurally fair process which was not unreasonable and oppressive.
Skanska said there was no concept of abuse of process in adjudication and a referring
party was free to obtain whatever tactical advantage it could. It also had the right
to start adjudication in relation to a dispute “at any time” and with the unrestricted
right to start, abandon and pursue ‘serial’ adjudications in respect of the same dispute.
The court referred to sections 108(1), 108(2), 108(3) of the Act and the relevant provisions
of the Scheme found at paragraphs 1(1), 7(1), 9(1), 9(3) 11(1), 13, 14 and 15.
The court reiterated that the Act and the Scheme envisaged a rough and ready process. The referring
party had the clear advantage of selecting the timing and scope of the dispute. The timetable was
very tight. The inherent unfairness in the process was justified by the advantage of
speed and efficiency, balanced by the temporary effect of any decision.
Turning to the legal principles, there was no express or implied restriction in the
Act or the Scheme precluding a party from withdrawing a disputed claim which had been
referred to adjudication: Midland Expressway Ltd v Carillion Construction Ltd29 per Jackson
J., even after the referral notice had been served, regardless of the motive for the
withdrawal, and nothing to preclude that party from pursuing the claim in a later adjudication:
Lanes Group plc v Galliford Try Infrastructure Ltd30 per Jackson LJ.
The principle of abuse of process did not apply to adjudication: Connex South
Eastern Ltd v MJ Building Services Group plc31 per Dyson LJ.
However, it did not follow that the courts would never intervene to prevent a party
from pursuing a claim in adjudication.
The court had power under section 37 of the Senior Courts Act 1981 to prevent an adjudication
where (a) one party could show that the other party had invaded, or threatened to invade, a
legal or equitable right of the former, amenable to the jurisdiction of the court, or (b) where one
party to any action had behaved, or threatened to behave, in a manner which was unconscionable. The
court thus had power to grant an injunction restraining a party from commencing or continuing an
adjudication that was unreasonable and oppressive.

The court rejected a submission that it was open to a party to start and stop serial adjudications
in respect of the same claim. Doing so and requiring a party to incur irrecoverable costs could
amount to unreasonable and oppressive behaviour, though it was a question of fact and
degree in each case.
The Act and the applicable Scheme did not impose any restrictions on the referring party’s
entitlement to withdraw unilaterally a claim referred to adjudication or to commence a further
adjudication in respect of the same, or substantially the same, dispute. It was envisaged that
where an adjudicator resigned, the same dispute might be the subject of a further reference. The
adjudicator in Adjudication No.1 did not reach a decision. Therefore the adjudicator in
Adjudication No.2 would have had jurisdiction to determine the dispute referred.
The court’s power to grant an injunction to restrain the second adjudication might be
exercised, for example, where the adjudicator did not have jurisdiction because the dispute had
been decided in an earlier adjudication, or where the referring party had failed to comply
with the adjudication agreement (such as failures to pay awards or costs), or where the
further adjudication was vexatious (such as serial adjudications in respect of the same claim).
Skanska’s withdrawal of the claim in Adjudication No.1 was unreasonable, the
unavailability of counsel rarely being an excuse for failing to meet an agreed
timetable, especially where the party in default was the referring party who had control of the
timing and scope of the reference. However, unreasonable behaviour by one party would not
automatically deprive it of the right to adjudicate the dispute in a subsequent reference. In this
case, the substance of the claims remained the same and therefore, Jacobs would be able to rely in
large part on its previous response. The need for new material, including new quantum expert
evidence, had been anticipated by Skanska following Jacobs’ response, hence Jacobs’
action in seeking the right to submit a rejoinder. The inconvenience and additional costs
suffered by Jacobs were not so severe or exceptional so as to warrant the grant of an injunction.
Therefore Skanska’s conduct was not oppressive.
Nevertheless Jacobs was entitled to any wasted or additional costs caused by Skanska’s failure to
comply with the original agreement. It was common ground that, where there was absent agreement
giving the adjudicator jurisdiction to award costs, a party’s costs of adjudication proceedings
were not recoverable. However, in this case, the parties had entered into an ad hoc agreement under
which the procedure and timetabletoresolvethereferreddisputeinthefirstadjudication had been
agreed and fixed. That agreement imposed new enforceable obligations on the parties.
Alternatively, there was an implied term in the ad hoc agreement that if one party
changed its mind and decided to ignore the agreement, it would pay the wasted costs of the
other party.
The failure to serve its reply or continue with the first adjudication constituted a
breach of the ad hoc agreement, entitling Jacobs to any wasted or additional costs as
damages.
Conclusion
i) A party to adjudication was entitled to withdraw unilaterally a dispute referred to adjudication
and commence a further adjudication in respect of the same, or substantially the same,
dispute.
ii) In such circumstances, the court had power to grant an injunction to restrain pursuit of the
further adjudication if the further adjudication was unreasonable and oppressive.
iii) On the facts, the second adjudication did not amount to unreasonable and oppressive behaviour.
iv) Jacobs was entitled to its wasted and/or additional costs, if any, caused.

 

This article was originally written and published on the internet by Slater Heelis on 07/06/18.

 

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

 

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