Adjudication: how did it all get so complicated?

Take a gander at this very recent judgment. It is all about challenging the result in an adjudication. It is between Iluminesia Ltd (known as Alterego Facades) and RFL Facades Ltd. It’s ordinary – these days. Ordinary in its complexity. It needed, and it got, an adjudicator who is hugely experienced and knows his stuff. It needed, and it got, representatives who were hugely experienced and know their stuff. It needed, and it got, a judge in the Newcastle Technology and Construction Court who knows his adjudication stuff. The ordinariness of adjudication nowadays is its complexity. It’s somewhat hifalutin, ever so sophisticated, and not a place for amateurs… or so it seems.

The story: a £41m hotel refurb in Paddington, completion due mid 2024. The employer was Devco Ltd; main contractor Gilbert Ash Ltd. Subcontractor for the concrete facade was RFL Facades, and its supplier was Alterego Facades: it was these two who fell out about money owed..

>>Also read: The construction year ahead: what can we expect in 2024?

>>Also read: How a new model law can provide oven-ready adjudication

The adjudicator was Donald Pugh, erstwhile QS and chartered builder then 20 years as a construction solicitor. Oodles of adjudication appointments behind him. Good job he had all this in his kit bag of qualifications. He needed it all to face the formidable artillery by highly competent representatives. They challenged his position up hill and down dale. He kept his nerve. Dismissed every challenge except one (I’ll return to that). The adjudicator’s award was that RFL should pay £292,952.39. It baulked and had to be brought to court.

Now let’s look at those challenges dealt with by Mr Pugh. Two first-class counsel presented the arguments. It’s worth repeating that the adjudication was heaving with complexity. Counsel for RFL superbly identified incy-wincy reasons, good reasons, for resisting payment. He lost on all points, but his arguments had force; they were worthwhile. His downfall was that Judge Davis-White KC was right onto and inside all the nuanced argument.

The adjudicator, in his deliberations, first found the contract between Alterego Ltd and RFL was a construction contract as defined by the Construction Act. But he soon resiled from that. He saw, and said to the parties, that it was a supply-only deal and so not a construction contract. In his correction he detected, however, that the supply-only deal incorporated a written disputes clause that included a reference to adjudication via “the Scheme”.

You might have twigged by now that I am having a carp. This ordinary dispute for sums due required a simple system designed for the building industry

In court, at enforcement, counsel (for the challenger) James Bowling argued that the adjudicator wrongly found a contract. The judge used a fine-toothed comb to identify the true offer and true acceptance. He found the contract and upheld the adjudicator’s announcement that there was an adjudication clause on this supply-only contract. All that analysis in court is worth reading, as a training exercise on what makes the toing-and-froing via offer and acceptance into a done deal.

There is more. Mr Bowling argued that the notice to adjudicate was defective and therefore a nullity. That document is required to set out specific matters. Missing, said counsel, was (1) the nature and brief description of the dispute; (2) where the dispute arose; and (3) the redress required. As to a brief description, the “notice mentions the letter of claim sometime leading up to the adjudication”. That was enough to defeat any complaint about dispute description, and also defeat the want of where the dispute arose. Nor could it be said that the redress was unknown. In short, the notice did get the dispute in the adjudication off the ground.

There is more. Counsel argued that the adjudicator had boobed by deciding a matter that had not been referred to him. That would be a no-no if it happened. The limit of jurisdiction was an award in damages arising out of a termination account. But jurisdiction was wider, said the court. The adjudicator had awarded financial relief by way of a liquidated sum, when part of the contract was cancelled. That’s not a claim in damages; instead it was a specific deduction under the contract for which the adjudicator had full jurisdiction (so, wider than damages). Having argued unsuccessfully that the adjudicator had gone too far in his scope, it was now argued fairly that the adjudicator had failed elsewhere in the adjudication to actually decide certain issues… failed to “exhaust his jurisdiction” is the technical phrase. This too was rejected, simply because the adjudicator’s award was sufficient to deal with all points.

There is more, and more, and more. Argued was a breach of national justice; argued too that there was a fun topic known as approbation and reprobation. Every bricklayer that I know is familiar with this legalism.

You might have twigged by now that I am having a carp. This ordinary dispute for sums due required a simple system designed for the building industry. Originally (25 years ago) we designed that simple system, whereby two QSs would battle out the squabble and have a third QS decide pro-tem the direction and amount of money to flow. It’s only a temporary position, says the system. A cash flow device. I believe it’s time now to reflect on this original intention. 

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple