Keep it together

The Scottish judge Lord Drummond Young used a neat phrase in the case of Castle Inns (Stirling) vs Clark Contracts: “the unwinding of an adjudicator’s decision”.

The judge had to unwind the adjudication award to fathom what the adjudicator had decided. That’s because by the time the court became involved, a time barrier meant that the court could not decide the same dispute. In other words, the parties were stuck with what the adjudicator had decided.

The same problem crops up when there are successive adjudications on the same job, and the latest adjudication has to fathom what the previous one decided. So can I appeal to my fellow adjudicators: please write your award and explain your decisions so that all those who come after you know precisely what you decided – not just the result, but the “sub-decisions” you made en-route.

Anyway, let me tell you about Castle vs Clark. The contractor was undertaking a large demolition and rebuilding job for a what was eventually going to be a nightclub in the city of Perth. The parties fell into dispute and adjudications followed. One of the awards came just after the architect issued its final certificate. The JCT contract rules say that if an adjudicator’s award comes after the final certificate, the parties have 28 days to begin litigation or arbitration. If they don’t, the adjudicator’s decision is binding forever.

Now that’s a tricky position to be in.

Credit: Simone Lia

The adjudicator in this case is experienced and competent. But as in most adjudications, the information was hurled at him thick and fast. The resulting decisions can be less accurate than the ones that conclude a trial or an arbitration. It’s all hell for leather.

It’s tricky, too, if the small print covering contract terms and rules contains a nasty surprise. The JCT rules have one – that 28-day limit after the final certificate. This should be in big red writing, but it isn’t. It is a rule that is ever so easy for the commercial businessman to miss in the hurly-burly of managing a building project.

Castle’s complaint was that Dimension Shopfitting, its fit-out contractor, was delayed by four weeks when alleged defects were discovered in Clark’s earlier work.

Even if the adjudicator has carefully identified all of the elements of the dispute, it is dangerous to land on one element alone

The adjudicator was appointed and he decided these defects caused a one-week delay to the shopfitter. Castle could not challenge that one week because the 28-day final certificate barrier was in the way, but it still came to court.

Castle argued that the one-week delay was limited to the shopfitter’s work. No, said Clark, the one-week delay was relevant to all claims including one for four weeks’ loss of profit, which is a lot of money.

Can you see now how important the adjudicator’s decision is? What is its effect? Its scope? And can you see how serious it is that the JCT small print shuts Castle out?

Castle was arguing that the adjudicator had only made a decision to do with the fit-out. If correct, it meant Castle was not shut out from coming to court with a loss of profit claim.

When considering a decision, the ordinary place to begin is the notice of adjudication. Be careful, though. The dispute in the notice often grows arms and legs. Scope grows by implied consent. It is the eventual decision and award that require the detective work. And even if the adjudicator has carefully identified all of the separate elements of the dispute, it is dangerous to land on one decision, one element alone.

“It is artificial to consider each such element in isolation as a dispute or difference,” said the judge. “The dispute between the parties rather relates to the totality of the elements …”

When he interpreted all the decisions made by the adjudicator, he detected that the award was only about the one-week delay to the shopfitter.

So the 28-day time barrier did not catch the claim for loss of profit. It was not precisely the same question of delay.

It was still open to Castle to argue that the nightclub’s delayed opening was caused by a different delay. All that Castle has to do is come back to court and prove it.