Suds law: Limiting adjudication materials

Ah, yes, it’s our old friend, the kitchen sink. Take a look at a very recent case called Quartzelic vs Honeywell Control Systems. The adjudicator did not accept he had a kitchen sink adjudication, but the court said he had and would not enforce his award. The short point is this: does our 28-day adjudication allow broad new arguments to be raised after the adjudication is launched? Answer: kitchen sink.

Liverpool has spent squillions on its city centre refurb in Paradise Street. Honeywell was a subcontractor. Quartzelic took on the sub-sub-contract for a communication system in six new buildings. According to Quartzelic, the next interim account was more than double the order value. Honeywell valued it at less. You’ve got the idea. Now then, I have no doubt Quartzelic and Honeywell were batting the ball to and fro about what should be paid. All this was in March, April and May. By June the rehearsing was halted. Quartzelic called for the adjudicator. You can be pretty sure that a dispute had been conceived, borne, delivered, and washed in the kitchen sink.

Now then, what was the idea behind adjudication? It was that an outsider to a dispute would look at the quarrels and decide whose arguments carried the day. So, if one side’s idea of what was to be paid was back-of-the-envelope stuff, and the other’s a fully detailed measured analysis, need I say what the award would decide? Easy. Cheap. Fast. That system works. In other words, it was the dispute that was already inside the fort that was decided, having hauled up the drawbridge, with the adjudicator and parties indoors. After all, the quarrelling parties had all done with the quarrelling when the adjudicator rode into town.

If one side’s idea of what was to be paid was
back-of-the-envelope stuff, and the other’s a fully detailed measured analysis, need I say what the award would decide?

That’s not what happened here. And there is a good reason for it. The scope of the adjudication is not decided by the adjudicator; it is the referring party that is entitled in its notice of adjudication to say what it is that the adjudicator is to decide. He can chose to expressly limit or qualify the range of matters for decision. It might be one sole issue – or a kitchen sink reference.

Credit: Simone Lia

So, if the notice of adjudication said, “decide the final account”, then nothing constrains the adjudicator to the arguments up to the point of beginning the adjudication. It is open to both parties to run any new arguments it can think of. Sometimes a referring party chooses to cast a notice so as to deliberately not bring out all the issues latent within its seemingly simple claim. But by doing so, that party has to accept that any ground that exists that might justify, say, non-payment, can be advanced whether previously advanced or not. “The referring party takes the risk that its bluff may be called in an unexpected manner,” said one judge.

The referring party may want to slide in some new argument in its referral. In Quartzelic’s case, Honeywell ran a new argument in its response. The adjudicator had to construe the notice of adjudication and decided he was not entitled to take on board the new argument. The enforcement judge decided the opposite – that it was unfair not to let new stuff in.

It is the referring party that is entitled in its notice of adjudication to say what it is that the adjudicator is to decide

There is another way to put all this. The dispute pre-adjudication is already complete and so too the arguments. It is open to the referring party to present all that material – that is, both sides’ point of view – and ask for those materials to be the scope of this adjudication. If however the notice of adjudication is so wide as to imply the invitation of new materials, it is in effect a change to the the original dispute. Parliament did not invent an unfair system. If it is true that new materials can come in, then it is also true that the other party must have enough time to answer the new stuff. And if there is not enough time in this high-speed machinery and if the new material could have been canvassed before the adjudication began, it is arguably too late to let it in.

You can advance as complex a case as you like and full of new material as long as it is within scope of the original notice of adjudication and I have enough time extensions so that I can appreciate the issues and arguments; then the kitchen sink is okay. But, don’t forget, you open the door to the respondent to bring in his own pots and pans and knives and cleavers.