Complexity theory: Interconnected disputes

There were two interesting points in the case of HS Works vs Enterprise Managed Services. Last week I talked about the first: it was about adjudicating 51,000 job orders in one go; in other words, one great big lump of a dispute. The second is how to deal with several smaller lumps and how the court might deal with enforcing an award that might affect others.

Look, this newfangled, 11-year-old 28-day adjudication process is taking some getting used to. True, true, the folk struggling most are not the builders but the lawyers. The reasons are several, but one key theme is that we try to do something in adjudication that lawyers never do in litigation. Nobody in litigation comes with one quarrel at a time. Litigation is one big lump. The bucket on a litigation excavator is enormous, but adjudication was designed to deal with grains of sand at a time. Lots of little buckets.

Begin with a few basic rules. First, at the end of each and every adjudication, except in special circumstances, both parties must comply with the adjudicator’s decision. If not, the court will persuade them to do so. Second, the next adjudicator is bound by the first adjudicator. The tenth is bound by the previous nine. Third, no adjudicator can

re-decide a dispute that has been done. Fourth, coming to an adjudication with new arguments on a previously decided dispute and calling it a new dispute is ambitious. Having said all that, what does the judge do when faced with a request to enforce several awards at once about the same building contract between the same people?

Here is what Mr Justice Akenhead says in the HS Works and Enterprise case. First, determine whether the decisions in front of you are valid. If yes, consider whether each can be enforced. How each decision is enforced is a matter for the court. The judge said: “It may be wholly inappropriate to permit a set-off of a second financial decision in circumstances where the first decision was predicted upon a basis that there could be no set-off.” Hmmm. I confess I’m not entirely clear what that remark is all about. It is true that nothing in the Construction Act legislates for setting off one adjudicator’s decision against another but it does require each and every effective award to be obeyed.

Since the 28-day system is designed to deal immediately with a dispute that blew up yesterday, the court is getting used to the idea that enforcement is to be done straight away

In the HS Works case the judge enforced both decisions in front of him. The first awarded HS Works £1.8m for wrongful withholding. The second decided the final account figure. The end result will speak for itself in who gets what. If you think about it, the whole system is designed for serial dispute deciding. That’s why the 28 days is there. And since it is a system designed to deal immediately with a dispute that blew up yesterday, the court is getting used to the idea that enforcement is something to be done straight away. So, if one award goes one way and the next goes the other, the system enforces both. And if they both come to the court at the same time the answer is to tot up the result and pay the net difference.

Credit: Simone Lia

It makes no odds to me as an adjudicator whether you bring a big lump or grains of sand, but it makes a difference to the parties. The reason is, with big lumps you have to be good at case presentation. Forgive me if I say that some of you are awful. If you bring in masses of material and the presentation is bad, there is a real chance that the adjudicator will miss something. And that might be your winning argument. It’s not the adjudicator’s job to rummage. Nor is there time to fathom some vague argument. The ingredient for a successful big-lump dispute is easy reading. Guide the adjudicator to precisely which piece of paper should be read at each part of the story.

Contrast that with a neat one-off claim: that is tailor-made for 28 days. The court is now familiar with enforcing those neat heads. There is no reason why an enforceable award should not comfortably meld with a later one. And if money goes one way one day, there is no reason why the adjudicator and court can’t order it to go the other way the next day or the next month. The system is ideal for each and every squabble about interim accounts, about each and every extension of time, about each and every variation. Nothing beats it – like it or lump it.

Original print headline - Complexity theory