Jacobs UK Limited V Skanska Construction UK Limited

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Jacobs UK Limited v Skanska Construction UK Limited, Const. L.J. 2017, 33(8),...
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\u169\'3f 2017 Thomson Reuters.
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Const. L.J. 2017, 33(8), T187-T196
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Construction Law Journal
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2017
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Jacobs UK Limited v Skanska Construction UK Limited
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\u169\'3f 2017 Sweet & Maxwell and its Contributors
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Subject:
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Civil procedure
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Other Related Subject:
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Construction law. Dispute resolution.
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Keywords:
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Abuse of process; Adjudication; Construction disputes; Injunctions; Jurisdiction;
Renewed applications; Unreasonable conduct; Wasted costs orders; Withdrawal;
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Legislation:
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Housing Grants, Construction and Regeneration Act 1996 (c.53)
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s.108
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Senior Courts Act 1981 (c.54)
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Cases:
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Jacobs UK Ltd v Skanska Construction UK Ltd [2017] EWHC 2395 (TCC); [2017] 5 Costs
L.R. 865 (QBD (TCC))
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Midland Expressway Ltd v Carillion Construction Ltd (No.3) [2006] EWHC 1505 (TCC);
[2006] B.L.R. 325 (QBD (TCC))
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Lanes Group Plc v Galliford Try Infrastructure Ltd (t/a Galliford Try Rail) [2011]
EWCA Civ 1617; [2012] Bus. L.R. 1184 (CA (Civ Div))
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Connex South Eastern Ltd v MJ Building Services Group Plc [2005] EWCA Civ 193;
[2005] 1 W.L.R. 3323 (CA (Civ Div))
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H2. The claimant contractor began an adjudication against the defendant engineer
whom it had engaged to provide design services relating to street lighting in
Lewisham and Croydon. The parties reached agreement as to the applicable procedural
rules and timetable for the adjudication on 13 February 2017. The contractor\
u8217\'3fs counsel became unavailable and it was unable to serve its reply by the
date agreed between the parties. An extension of time having been refused by the
engineer, the adjudicator refused to grant one unless both parties agreed. The
contractor withdrew its reference to adjudication and invited the adjudicator to
resign, which he did. The contractor gave a fresh notice of an intention to refer
the dispute to a second adjudication, which contained the same claims but in
relation to one of the claims had been withdrawn, the scope of the dispute had
narrowed, and the methodology and quantum of the damages claimed had been revised.
The engineer applied to court for an injunction to restrain the contractor from
proceeding with the second adjudication, on the basis that the engineer had a right
to a resolution process which was fair to both parties and did not confer an
uncovenanted advantage on the referring party beyond that implicit in the rough and
ready adjudication process.
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H3.
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Held,
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dismissing the application:
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The court had power to grant an injunction to restrain pursuit of a further
adjudication where it was unreasonable and oppressive but, although the withdrawal
had been unreasonable, the substance of the claims remained the same and the
engneer would be entitled to rely in large part on its prepared response and the
inconvenience and additional costs suffered as a result of the second adjudication
were neither severe nor exceptional.
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The engineer was entitled to its wasted or additional costs, or both, if any,
caused by the contractor\u8217\'3fs failure to comply with the agreement of 13
February 2017.
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Nicholas Dennys QC
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appeared for the claimant engineer, instructed by Beale & Co.
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Justin Mort QC
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appeared for the defendant contractor, instructed by Skanska UK plc.
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Mrs Justice O\u8217\'3fFarrell:
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1.. This is an application by the claimant (\rdblquote Jacobs\rdblquote ) against
the defendant (\rdblquote Skanska\rdblquote ) for an injunction to restrain Skanska
from proceeding with an adjudication, following Skanska\u8217\'3fs withdrawal from
an earlier adjudication in respect of the dispute between the parties.
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2.. The material question raised by the dispute is whether a party to an
adjudication is entitled to withdraw a dispute from adjudication and refer the
same, or substantially the same, dispute to a second adjudication.
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Background to the dispute
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3.. From about 2008, Skanska engaged Jacobs to provide design services in respect
of a PFI project for the design and replacement of street lighting in Lewisham and
Croydon. In about February 2011 Skanska entered into a formal contract with Jacobs
for those services (\rdblquote the Design Agreement\rdblquote ).
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4.. A dispute has arisen between the parties as to the adequacy of the design
services provided by Jacobs. Skanska\u8217\'3fs case is that Jacobs provided design
and advice on which Skanska relied in submitting its bid for the PFI project.
Skanska\u8217\'3fs bid was successful. The design prepared by Jacobs following
commencement of the PFI contract differed materially from the design and
assumptions provided for the purposes of the bid. Skanska claims that as a result
of that disparity, together with delays in the production of the design and the
poor quality of the design, it has suffered loss and damage.
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5.. The Design Agreement is a construction contract for the purposes of
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section 108 of the Housing Grants Construction and Regeneration Act 1996
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(\rdblquote the 1996 Act\rdblquote ) and Clause 21 of the Design Agreement
contains an adjudication provision.
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6.. On 8 February 2017 Skanska gave notice of an intention to refer the dispute to
adjudication.
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7.. There was a concern as to whether the adjudication agreement complied with the
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1996 Act
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and Jacobs raised jurisdictional challenges in respect of the proposed
adjudication. Following exchanges of correspondence, the parties reached agreement
as to the applicable procedural rules and timetable for the adjudication, as
recorded in the exchange of e.mails on 13 February 2017:
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i)
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Mr Waterhouse would act as the adjudicator;
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ii)
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the statutory scheme for adjudication (\rdblquote the Scheme\rdblquote ) would
apply (subject to the agreed timetable);
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iii)
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the referral notice would be served by 17 February 2017;
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iv)
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the response would be served by 24 March 2017;
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v)
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the reply would be served by 7 April 2017; and
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vi)
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the time for the adjudicator to reach his decision would be extended and he would
be invited to issue his decision within 14 days of the date of service of the last
written submission (excluding Easter).
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8.. Mr Waterhouse was appointed as adjudicator.
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9.. The referral and response documents were served in accordance with the agreed
timetable.
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10.. Jacobs incurred substantial costs in responding to Skanska\u8217\'3fs claim in
the adjudication.
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11.. Unfortunately, Skanska\u8217\'3fs counsel became unavailable and Skanska was
unable to serve its reply by 7 April 2017 as agreed.
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12.. On 5 April 2017 Skanska requested an extension of time from Jacobs but the
request was refused.
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13.. Skanska requested the adjudicator to grant an extension of time but on 6 April
2017 he refused unless both parties agreed.
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14.. On 7 April 2017 Skanska withdrew its reference to adjudication and invited the
adjudicator to resign.
\par
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}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
15.. On 11 April 2017 the adjudicator resigned.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
16.. On 21 June 2017 Skanska gave a fresh notice of an intention to refer the
dispute to a second adjudication.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
17.. The second adjudication contains the same claims against Jacobs but the claim
in relation to one of the claims (the Croydon Central Network) has been withdrawn,
the scope of the dispute has narrowed, and the methodology and quantum of the
damages claimed has been revised.
\par
}
}
\u160\'3f
\par
}
{\li100 \f3 \b0 \ri100 \fs20 \cf19 \qc \i0
{\f3 \b0 \fs20 \cf19 \i0
The Claim
\par
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
18.. On 4 July 2017 Jacobs commenced these Part 8 proceedings, seeking the
following relief:
\par
}
{\f2 \b0 \fs20 \cf1 \i0
i)
}
}
a declaration that in proceeding with Adjudication No.2 Skanska are acting
unlawfully;
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
ii)
}
}
an order restraining Skanska from taking any further steps in furtherance of
Adjudication No.2;
}
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
iii)
}
}
an order requiring Skanska to withdraw from Adjudication No.2;
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
iv)
}
}
a declaration that Jacobs are entitled to be paid their costs of Adjudication
No.1; and
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
v)
}
}
further or other relief.
\par {\pntext }
}
}
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
19.. Jacobs\u8217\'3f case is that the parties agreed that the reference of this
dispute should be to an adjudicator appointed under the Scheme and that the
adjudication should be conducted in accordance with an agreed timetable. Jacobs had
a right to a resolution process which was fair to both parties and did not confer
an uncovenanted advantage on the referring party beyond that implicit in the rough
and ready adjudication process. Jacobs invites the court to grant relief to protect
Jacobs\u8217\'3f right to a procedurally fair process of the dispute which is not
unreasonable and oppressive.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
20.. Skanska\u8217\'3fs case is that there is no concept of abuse of process in
adjudication and a referring party is free to obtain whatever tactical advantage it
can. A party has the right to start adjudication in relation to a dispute at any
time. This gives a party an unrestricted right to start, abandon and pursue serial
adjudications in respect of the same dispute.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
21.. The issues for determination by this court are:
\par
}
{\f2 \b0 \fs20 \cf1 \i0
i)
}
}
whether a party to an adjudication is entitled to withdraw unilaterally a dispute
referred to adjudication and commence a second adjudication in respect of the same,
or substantially the same, dispute;
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
ii)
}
}
whether, in such circumstances, the court has power to grant an injunction to
restrain pursuit of the second adjudication;
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
iii)
}
}
if so, whether the court should exercise its discretion on the facts of this case;
and
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
iv)
}
}
whether Jacobs is entitled to its wasted costs in respect of the first
adjudication.
\par {\pntext }
}
}
}
}
}
\u160\'3f
\par
}
{\li100 \f3 \b0 \ri100 \fs20 \cf19 \qc \i0
{\f3 \b0 \fs20 \cf19 \i0
The 1996 Act and the Scheme
\par
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
22..
}
fldrslt
Section 108(1) of the 1996 Act
}}}
provides:
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\rdblquote A party to a construction contract has the right to refer a dispute
arising under the contract for adjudication under a procedure complying with this
section.\rdblquote
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
23..
}
fldrslt
}}}
provides:
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\rdblquote The contract shall\u8212\'3f
\par
}
{\f2 \b0 \fs20 \cf1 \i0
(a)
}
}
enable a party to give notice at any time of his intention to refer a dispute to
adjudication;
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
(b)
}
}
provide a timetable with the object of securing the appointment of the adjudicator
and referral of the dispute to him within 7 days of such notice;
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
(c)
}
}
require the adjudicator to reach a decision within 28 days of referral or such
longer period as is agreed by the parties after the dispute has been referred;
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
(d)
}
}
allow the adjudicator to extend the period of 28 days by up to 14 days, with the
consent of the party by whom the dispute was referred;
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
(e)
}
}
impose a duty on the adjudicator to act impartially; and
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
(f)
}
}
enable the adjudicator to take the initiative in ascertaining the facts and the
law.\rdblquote
\par {\pntext }
}
}
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
24..
}
fldrslt
}}}
provides:
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\rdblquote The contract shall provide that the decision of the adjudicator is
binding until the dispute is finally determined by legal proceedings, by
arbitration (if the contract provides for arbitration or the parties otherwise
agree to arbitration) or by agreement. The parties may agree to accept the decision
of the adjudicator as finally determining the dispute.\rdblquote
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
25.. The Scheme contains the following material provisions:
\par
}
Paragraph 1(1): \ldblquote Any party to a construction contract (the \ldblquote
referring party\rdblquote ) may give written notice (the \ldblquote notice of
adjudication\rdblquote ) of his intention to refer any dispute arising under the
contract, to adjudication.\rdblquote
\par {\pntext }
}
pntext }
Paragraph 7(1): \ldblquote Where an adjudicator has been selected in accordance
with paragraphs 2, 5 or 6, the referring party shall, not later than seven days
from the date of the notice of adjudication, refer the dispute in writing (the \
ldblquote referral notice\rdblquote ) to the adjudicator.\rdblquote
}
\par {\pntext }
}
pntext }
Paragraph 9(1): \ldblquote An adjudicator may resign at any time on giving notice
in writing to the parties to the dispute.\rdblquote
\par {\pntext }
}
pntext }
Paragraph 9(3): \ldblquote Where an adjudicator ceases to act under paragraph
9(1) \u8211\'3f
\par {\pntext }
}
{\f2 \b0 \fs20 \cf1 \i0
(a)
}
}
the referring party may serve a fresh notice under paragraph 1 and shall request
an adjudicator to act in accordance with paragraphs 2 to 7; and
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
(b)
}
}
if requested by the new adjudicator and insofar as it is reasonably practicable,
the parties shall supply him with copies of all documents which they had made
available to the previous adjudicator.\rdblquote
\par {\pntext }
}
}{\pntext }
}
}
pntext }
Paragraph 11(1): \ldblquote The parties to a dispute may at any time agree to
revoke the appointment of the adjudicator\u8230\'3f\rdblquote
\par {\pntext }
}
pntext }
Paragraph 13: \ldblquote The adjudicator may take the initiative in ascertaining
the facts and the law necessary to determine the dispute, and shall decide on the
procedure to be followed in the adjudication \u8230\'3f\rdblquote
\par {\pntext }
}
pntext }
Paragraph 14: \ldblquote The parties shall comply with any request or direction of
the adjudicator in relation to the adjudication.\rdblquote
\par {\pntext }
}
pntext }
Paragraph 15: \ldblquote If, without showing sufficient cause, a party fails to
comply with any request, direction or timetable of the adjudicator made in
accordance with his powers, fails to produce any document or written statement
requested by the adjudicator, or in any other way fails to comply with a
requirement under these provisions relating to the adjudication, the adjudicator
may \u8211\'3f
\par {\pntext }
}
{\f2 \b0 \fs20 \cf1 \i0
(a)
}
}
continue the adjudication in the absence of that party or of the document or
written statement requested,
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
(b)
}
}
draw such inferences from that failure to comply as circumstances may, in the
adjudicator\u8217\'3fs opinion, be justified, and
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
(c)
}
}
make a decision on the basis of the information before him attaching such weight
as he thinks fit to any evidence submitted to him outside any period he may have
requested or directed.\rdblquote
\par {\pntext }
}
}{\pntext }
}
}
}
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
26.. The adjudication procedure envisaged by the
}
fldrslt
1996 Act
}}}
and the Scheme is a rough and ready process. The referring party has a clear
advantage in selecting the timing and scope of the dispute. The timetable is very
tight, regardless of the size and complexity of the dispute. Provided that they
follow the rules of natural justice, adjudicators have wide powers to determine the
procedure and evidence considered to reach their decisions. The inherent unfairness
in the adjudication process is justified by the advantage of speed and efficiency
in obtaining a decision and balanced by the temporary effect of any decision.
\par
}
}
\u160\'3f
\par
}
{\li100 \f3 \b0 \ri100 \fs20 \cf19 \qc \i0
{\f3 \b0 \fs20 \cf19 \i0
Legal Principles
\par
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
27.. There is no express or implied restriction in the
}
fldrslt
1996 Act
}}}
or the Scheme that precludes a party from withdrawing a disputed claim which has
been referred to adjudication:
}
findType=Y&serNum=2009570549&pubNum=9999&cite=IA3F123601C5C11DB8CE1B53A605F5054&ori
ginatingDoc=ID0AE4B90CABE11E7BA29BBDA1A0D6E5F&refType=UC&originationContext=documen
t&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&contextData=(sc.Search)" }{\fldrslt
Midland Expressway Ltd v Carillion Construction Ltd [2006] EWHC 1505
}}}
per Jackson J at paras.[100] and [101].
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
28.. The entitlement of a party to withdraw a claim persists even after the
referral, regardless of the motive for the withdrawal, and does not necessarily
preclude that party from pursuing the claim in a later adjudication:
}
findType=Y&serNum=2026706710&pubNum=9999&cite=I3476E9D02C3611E1B5F3E73282D71EFF&ori
Lanes Group plc v Galliford Try Infrastructure Ltd [2012] EWCA Civ 1617
}}}
per Jackson LJ at paras.[38] \u8211\'3f [40].
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
29.. The principle of abuse of process does not apply to adjudication:
}
findType=Y&serNum=2006291191&pubNum=9999&cite=I8D30E420E42711DA8FC2A0F0355337E9&ori
Connex South Eastern Ltd v MJ Building Services Group plc [2005] EWCA Civ 193
}}}
per Dyson LJ at para.[40].
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
30.. However, it does not follow that the courts will never intervene to prevent a
party from pursuing a claim in adjudication.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
31..
}
findType=Y&serNum=0111235116&pubNum=121177&cite=I0C60BC31E44A11DA8D70A0E70A78ED65&o
fldrslt
Section 37 of the Senior Courts Act 1981
}}}
provides:
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\rdblquote The High Court may by order (whether interlocutory or final) grant an
injunction or appoint a receiver in all cases in which it appears to the court to
be just and convenient to do so.\rdblquote
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
32.. The court\u8217\'3fs power under
}
findType=Y&serNum=0111235116&pubNum=121177&cite=I0C60BC31E44A11DA8D70A0E70A78ED65&o
fldrslt
section 37
}}}
may be exercised (a) where one party can show that the other party has invaded, or
threatens to invade, a legal or equitable right of the former for the enforcement
of which the latter is amenable to the jurisdiction of the court, or (b) where one
party to any action has behaved, or threatens to behave, in a manner which is
unconscionable. The court\u8217\'3fs jurisdiction extends to a power to grant an
injunction restraining a party from commencing or continuing an adjudication that
is unreasonable and oppressive, although the fact that a claim is being pursued by
way of adjudication rather than litigation may affect the court\u8217\'3fs view as
to whether or not it amounts to unreasonable and oppressive behaviour:
}
findType=Y&serNum=2021532432&pubNum=9999&cite=I65BAA110316211DFB28DFA089F4F4974&ori
Mentmore Towers Ltd v Packman Lucas Ltd [2010] EWHC 457 (TCC)
}}}
per Edwards-Stuart J at paras. [14] \u8211\'3f [23];
}
findType=Y&serNum=2032449627&pubNum=9999&cite=I36480BA0856111E3A369B2FF53F5F2A8&ori
Twintec Ltd v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC)
}}}
per Edwards-Stuart J at paras.[63] \u8211\'3f [73].
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
33.. I reject Mr Mort\u8217\'3fs submission that it would be open to a party to
start and stop serial adjudications in respect of a claim. Subjecting a party to
serial adjudications in respect of the same claim and requiring it to incur
irrecoverable costs could amount to unreasonable and oppressive behaviour. It is a
question of fact in each case as to whether the behaviour of the party to
adjudication is found, on an objective basis, to be unreasonable and oppressive.
\par
}
}
\u160\'3f
\par
}
{\li100 \f3 \b0 \ri100 \fs20 \cf19 \qc \i0
{\f3 \b0 \fs20 \cf19 \i0
Discussion
\par
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
34.. In this case, the
}
fldrslt
1996 Act
}}}
and the applicable Scheme do not impose any restrictions on the referring party\
u8217\'3fs 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 is envisaged that in circumstances where an adjudicator resigns,
the same dispute may be the subject of a further reference. The adjudicator in the
first adjudication did not reach a decision. Therefore the adjudicator in the
second adjudication would have jurisdiction to determine the dispute referred.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
35.. The court has power to grant an injunction to restrain the second adjudication
if it is established that it is unreasonable and oppressive. Such power will be
exercised where the adjudicator does not have jurisdiction (such as where the
dispute has already been decided in an earlier adjudication), where the referring
party has failed to comply with the adjudication agreement (such as failures to pay
awards or costs from earlier adjudications), or where the further adjudication is
vexatious (such as serial adjudications in respect of the same claim).
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
36.. Skanska\u8217\'3fs withdrawal of the claim was unreasonable. The
unavailability of counsel is rarely a good excuse for failing to meet an agreed
timetable, especially where the party in default is the referring party who
controls the timing and scope of the reference. However, unreasonable behaviour by
one party will not automatically deprive it of the right to adjudicate the dispute
in question in a subsequent reference. The court will not intervene unless the
further reference is both unreasonable
}
{\f2 \b0 \fs20 \cf1 \i1
and
}
}
oppressive. In this case, the substance of the claims remains the same and
therefore, Jacobs will be entitled to rely in large part on its prepared response.
Although there is new material, including new quantum expert evidence, it was
anticipated that there might be new arguments raised by Skanska following Jacobs\
u8217\'3f response; hence the indication that Jacobs would seek the right to submit
a rejoinder. The inconvenience and additional costs suffered by Jacobs as a result
of the second adjudication are not so severe or exceptional so as to warrant
intervention by the courts by way of injunctive relief.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
37.. Jacobs is entitled to any wasted or additional costs caused by Skanska\
u8217\'3fs failure to comply with the agreement of 13 February 2017. It is common
ground that, in the absence of agreement giving the adjudicator jurisdiction to
award costs, a party\u8217\'3fs costs of adjudication proceedings are not
recoverable. However, in this case, the parties entered into an
}
{\f2 \b0 \fs20 \cf1 \i1
ad hoc
}
}
agreement under which the procedure and timetable to resolve the referred dispute
in the first adjudication were agreed and fixed. That went beyond mere agreement as
to the timetable to be directed by the adjudicator in respect of an existing
contractual or statutory adjudication and imposed new enforceable obligations on
the parties.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
38.. Skanska\u8217\'3fs failure to serve its reply or continue with the first
adjudication constituted a breach of the
}
{\f2 \b0 \fs20 \cf1 \i1
ad hoc
}
}
agreement, entitling it to its wasted or additional costs as damages. It does not
follow that Jacobs is entitled to all costs incurred in connection with the first
adjudication. As indicated above, many of the costs incurred in responding to the
claims in the first adjudication would have been incurred in responding to the
second adjudication. The costs wasted in respect of abandoned claims will not be
recoverable because even if the first adjudication had continued, Skanska would
have been at liberty to abandon the CCN claim or concede it in its reply without
any costs implications. However, if and to the extent that Jacobs could establish
wasted or additional costs caused by Skanska\u8217\'3fs failure to comply with the
agreed procedure and timetable, it would be entitled to recover them as damages.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
39.. Alternatively, there was an implied term in the
}
{\f2 \b0 \fs20 \cf1 \i1
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. Such a term was both reasonable
and necessary. They were commercial parties with the benefit of legal
representation and they were aware of the substantial resources and funds required
to participate in an adjudication of this nature. If each party had been asked
whether they would expect the other party to pay any wasted costs in such
circumstances, they would have replied \ldblquote of course\rdblquote . Although
the
}
{\f2 \b0 \fs20 \cf1 \i1
ad hoc
}
}
agreement did not prohibit Skanska from withdrawing part or all of its claim, and
starting a fresh adjudication in respect of the same or substantially the same
claim, it did impose responsibility on Skanska for the costs wasted or incurred by
its failure to adhere to the agreed procedure and timetable.
\par
}
}
\u160\'3f
\par
}
{\li100 \f3 \b0 \ri100 \fs20 \cf19 \qc \i0
{\f3 \b0 \fs20 \cf19 \i0
Conclusion
\par
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
40.. For the reasons set out above:
\par
}
{\f2 \b0 \fs20 \cf1 \i0
i)
}
}
A party to an adjudication is entitled to withdraw unilaterally a dispute referred
to adjudication and commence a further adjudication in respect of the same, or
substantially the same, dispute.
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
ii)
}
}
In such circumstances, the court has power to grant an injunction to restrain
pursuit of the further adjudication if the further adjudication is unreasonable and
oppressive.
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
iii)
}
}
On the facts of this case, the second adjudication does not amount to unreasonable
and oppressive behaviour, justifying the exercise of the courts\u8217\'3f
discretion in granting injunctive relief.
\par {\pntext }
}
pntext }
{\f2 \b0 \fs20 \cf1 \i0
iv)
}
}
Jacobs is entitled to its wasted and/or additional costs, if any, caused by caused
by Skanska\u8217\'3fs failure to comply with the agreement of 13 February 2017.
\par {\pntext }
}
}
}
}
}
\u160\'3f
\par
}
{\li100 \f3 \b0 \ri100 \fs20 \cf19 \qc \i0
{\f3 \b0 \fs20 \cf19 \i0
Commentary
\par
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
C1. The question of whether a referring party could bring an adjudication to an end
by withdrawing its claim was considered by Jackson J. in
}
Midland Expressway Ltd v Carillion Construction Ltd [2006] EWHC. 1505 (TCC), [2006]
BLR 325
}}}
where he referred in passing to the Court of Appeal\u8217\'3fs obiter dictum in
}
findType=Y&serNum=2008399923&pubNum=9999&cite=ICD90D750E42711DA8FC2A0F0355337E9&ori
John Roberts Architects Ltd v Park Care Homes [2006] EWCA Civ 64, [2006] BLR 106
}}}
that a referring party could discontinue an adjudication. The point had not been
in direct issue because as appears from
}
findType=Y&serNum=2007085374&pubNum=9999&cite=I6BB71B20E43611DA8FC2A0F0355337E9&ori
John Roberts Architects v Park Care Homes [2005] EWHC 1637 (TCC)
}}}
, the parties had agreed that that the adjudicator did not have jurisdiction on the
ground that a relevant dispute between the parties had not arisen prior to the
issue of the notice to refer to adjudication. In
}
Midland Expressway
}}}
, the referring party had purported to withdraw the claim and Jackson J identified
the two following points amongst others:
\par
}
pnindent400 \pnf1 {\f2 \pntxtb \u8226\'3f}}{\listtext \li400 \f2 \qj \b0 \ri0 \fs20
\cf1 \i0 \u8226\'3f\tab }\ls43 {\pntext }
Adjudication is an informal process which arrives at an interim resolution of
disputes pending final determination by litigation or arbitration. It would be
contrary to the statutory purpose to prohibit a party from withdrawing from such a
process any claim which it did not wish to pursue.
\par {\pntext }
}
u8226\'3f}}{\listtext \li400 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0 \u8226\'3f\tab }\ls44
{\pntext }
If there were such a restriction, it would have the bizarre consequence that
parties would be forced to press on with bad claims in adjudication. This would
lead to wastage of costs and resources on the part of all parties.
\par {\pntext }
}
}
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
C2. In
}
Lanes Group Plc v Galliford Try Infrastructure Ltd (No. 3) [2011] EWCA Civ 1617,
[2012] BLR 121
}}}
Jackson L.J. confirmed that the right of a claimant to drop one head of claim and
to reserve it for later adjudication had been recognised in
}
Midland Expressway
}}}
even after there had been a referral. It should be pointed out that
}
Lanes
}}}
involved potential forum shopping by allowing the time for service of a referral
to expire, rather than withdrawal of the adjudication claim.
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
C3. The recognition of this right of withdrawal might be regarded as surprising
when other forms of dispute resolution are considered. In arbitration, it is not
only the arbitrator\u8217\'3fs right but his or her duty to deal with all matters
in dispute, and a matter does not cease to fall within that duty merely because the
parties are agreed upon the outcome.
}
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It follows that the arbitrator is obliged to make an award dismissing a claim
which has been withdrawn. In litigation, the only mode by which a claimant can now
submit to defeat is by discontinuance as expressly provided for by the rules,
unless he allows the proceedings to go on until there is judgment against him.
}
{\f2 \b0 \fs16 \cf1 \i0
2
}}}
}
The answer, we must suppose, is that adjudication is an unusual procedure,
distinct from arbitration and
}
{\f2 \b0 \fs20 \cf1 \i1
sui generis
}
}
.
}
{\f2 \b0 \fs16 \cf1 \i0
3
}}}
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
C4. In the case under consideration, O\u8217\'3fFarrell J, having referred to the
}
Midland Expressway
}}}
and
}
Lanes Group
}}}
cases, referred to the judgment of Dyson J in
}
findType=Y&serNum=2006291191&pubNum=9999&cite=I8D30E420E42711DA8FC2A0F0355337E9&ori
Connex South Eastern Ltd v MJ Building Services Group plc [2005] EWCA Civ 193,
[2005] BLR 201
}}}
[40], for the proposition that the principle of abuse of process does not apply to
adjudication ([29]). It may be worth expanding this succinct reference by
explaining that Dyson LJ was dealing with the powers of an adjudicator to deal with
potential abuses of process as follows:
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\rdblquote In the civil courts, the concept of \ldblquote abuse of process\
rdblquote is well understood. It applies in a number of different contexts: see
}
{\f2 \b0 \fs20 \cf1 \i1
Civil Procedure Volume 1, para 3.4.3
}
}
. But neither the Act nor the
}
findType=Y&serNum=0292759115&pubNum=121175&cite=I7289E941E42311DAA7CF8F68F6EE57AB&o
fldrslt
Scheme for Construction Contracts (England and Wales) Regulations (S1 1998/649)
}}}
gives an adjudicator the power to strike out or stay an adjudication for abuse of
process. Indeed, they contain no reference to \ldblquote abuse of process\rdblquote
. In my judgment, the only question is whether there is any limit on the time
within which a party may refer a dispute to adjudication.
}
The answer to that question depends on a proper interpretation of
}
fldrslt
section 108(2) of the Act
}}}
, and not on an application of the principles developed by the courts to control
their own process so as to prevent abuse.\rdblquote
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
C5. O\u8217\'3fFarrell J then went on to refer to the jurisdiction of the Court to
deal with such matters in relation to adjudication, as exemplified by such
decisions as
}
findType=Y&serNum=2021532432&pubNum=9999&cite=I65BAA110316211DFB28DFA089F4F4974&ori
Mentmore Towers Ltd v Packman Lucas Ltd [2010] EWHC 457 (TCC)
}}}
and
}
Twintec Ltd v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC)
}}}
. As it remains unreported, it may help if one particular passage in the latter
decision is reproduced:
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\rdblquote The issue here, therefore, is whether this referral to adjudication has
been brought unreasonably and oppressively. I should emphasise that these two
requirements are disjunctive. A referral to adjudication may be unreasonable (for
example, if deliberately delayed until shortly before Christmas) without
necessarily being oppressive. Alternatively, it may prove to be oppressive\
u8212\'3fperhaps because, unknown to the referring party, the relevant personnel
within the responding party have just been posted abroad\u8212\'3fwithout having
been unreasonably started. Both elements must be present and, in my judgment, to a
fairly high degree.\rdblquote
}
{\f2 \b0 \fs16 \cf1 \i0
4
}}}
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
O\u8217\'3fFarrell J then proceeded to apply that test to the facts and held that
the claimant contractor\u8217\'3fs withdrawal of the claim had been unreasonable
because the unavailability of counsel was rarely a good excuse for failing to meet
an agreed timetable, especially where the party in default was the referring party
who controlled the timing and scope of the reference ([36]). It was the application
of the second part of the test that proved fatal to the engineer\u8217\'3fs
application, because the inconvenience and additional costs suffered by the
engineer as a result of the second adjudication were not so severe or exceptional
so as to warrant intervention ([36]).
\par
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
C6. The balance of the judgment deals with an issue arising from the particular
circumstances of the case, namely that the parties had entered into an
}
{\f2 \b0 \fs20 \cf1 \i1
ad hoc
}
}
agreement under which the procedure and timetable to resolve the referred dispute
in the first adjudication were agreed and fixed, which went beyond mere agreement
as to the timetable ([37]). The failure to serve the reply or continue with the
adjudication constituted a breach of that agreement sounding in damages in the form
of wasted or additional costs ([38]).
\par
}
}
\u160\'3f
\par
}
}
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Footnotes
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Mustill & Boyd, Commercial Arbitration, 2nd ed, 128
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findType=Y&serNum=1899503588&pubNum=9999&cite=IA8D352D0E42711DA8FC2A0F0355337E9&ori
Fox v Star Newspaper Co. [1900] A.C. 19, HL(E)
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.
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{\li30 \ri30
{\li30 \f2 \b0 \ql \ri30 \fs20 \cf1 \i0
{\li30 \f2 \b0 \ql \ri30 \fs20 \cf1 \i0
Lanes Group Plc v Galliford Try Infrastructure Ltd (No. 3) [2011] EWCA Civ 1617,
[2012] BLR 121, 128 [40]
(Jackson LJ).
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Twintec Ltd v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC) [68]
(Edwards-Stuart J).
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\u169\'3f 2017 Sweet & Maxwell and its Contributors
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Const. L.J. 2017, 33(8), T187-T196
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End of Document
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\u169\'3f 2017 Thomson Reuters.
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}\sect }

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