HT-2023-000415 - [2024] EWHC 1199 (TCC)

Fecha: 20-May-2024

Is the proposed second referral an impermissible attempt to refer the same dispute?

VI. Is the proposed second referral an impermissible attempt to refer the same dispute?

33.

Dawnvale submits that Hylgar’s proposed second adjudication is impermissible as it is an attempt to refer to adjudication the same or substantially the same dispute as has already been decided. Dawnvale relies upon paragraph 9(2) of the Scheme for Construction Contracts which provides:

“An adjudicator must resign where the dispute is the same or substantially the same as one which has previously been referred to adjudication, and a decision has been taken in that adjudication.”

34.

The issue in the present case, as it crystallised in the course of argument, is this: is it permissible for Hylgar to refer to adjudication a claim for new heads of loss arising from the same repudiatory breach of contract as was determined against Dawnvale in the first adjudication? Does this amount to the same or substantially the same dispute?

35.

There is a great deal of caselaw on the question of what amounts to the same or substantially the same dispute. Surprisingly, neither party could identify a previous decision where this precise issue had arisen. It is not necessary for me to review the caselaw in detail because it has recently been the subject of comprehensive analysis by Coulson LJ in Sudlows Limited v Global Switch Estates 1 Limited [2023] EWCA Civ 813. He summarised the relevant principles at [55] to [59]:

“…I consider that there are three over-arching principles to be applied by an adjudicator, or an enforcing court, when considering arguments of overlap.

56.

The first is that the purpose of construction adjudication is not easy always to reconcile with serial adjudication (paragraphs 32 and 33 above). If the parties to a construction contract do engage in serial adjudication, and then inevitably get drawn into debates about whether a particular dispute has already been decided, the need for speed and the importance of at least temporary finality mean that the adjudicator (and, if necessary, the court on enforcement) should be encouraged to give a robust and common sense answer to the issue. It should not be a complex question of interpretation of documents and citation of authority.

57.

The second is the need to look at what the first adjudicator actually decided to see if the second adjudicator has impinged on the earlier decision (Quietfield,Harding v Paice, Hitachi). Of course it can be relevant to consider the adjudication notice, the referral notice and so on, but what matters for the purposes of s.108 and the paragraphs of the Scheme noted above, is what it was, in reality, that the adjudicator decided. It is that which cannot be re-adjudicated. The form and content of the documentation with which he was provided is of lesser relevance and, as was pointed out in Harding v Paice and Hitachi, can be misleading.

58.

The third critical principle is the need for flexibility. That is the purpose of a test of fact and degree. It is to prevent a party from re-adjudicating a claim (or a defence) on which they have unequivocally lost (HG Construction, Benfield), but to ensure that what is essentially a new claim or a new defence is not shut out. In this way, the re-adjudication in Carillion v Smith of the same claims, where the only differences were the figures, was impermissible whilst a new, wider, claim or defence was permissible, even if it included elements of a claim which had been considered before, such as in Quietfield, and Balfour Beatty. Indeed, I consider that the result in each of the reported cases to which I have referred is the product of common sense and fairness.

59.

Whilst I accept that it is not an invariable guide, one way of at least testing whether the correct approach has been adopted is to consider whether, if the second adjudication is allowed to continue, it would or might lead to a result which is fundamentally incompatible with the result in the first adjudication. If in that second adjudication, one or other of the parties is asking the adjudicator to do something that is diametrically opposed to that which the first adjudicator decided, then that may be an indication that what they are seeking to do is impermissible.”

[bold added]

36.

I gratefully adopt this summary of the relevant principles. I note in particular the emphasis on the need to identify what the first adjudicator actually decided, and to ensure that the second adjudication does not lead to a result which is fundamentally incompatible with the result in the first adjudication. Put in that way, it seems to me that the answer in the present case suggests itself. The first adjudication decided that Dawnvale was in repudiatory breach of contract, and it determined the true value of the work undertaken prior to that time. The second adjudication is intended to determine the recoverability and value of certain heads of loss consequential upon the repudiation. To my mind there is no overlap, and there is no question of the second adjudicator deciding the same or substantially the same dispute as was decided in the first adjudication. If the position were otherwise a referring party would be required to bring its entire claim encompassing all its heads of loss to adjudication at the same time. But (as with the consequential losses in this case) some heads of loss (for example delay) may not become apparent for some time. Such an approach would lead to delay in referring matters to adjudication and could obstruct rather than promote cashflow. That would not be consistent with the overriding approach to adjudication which is to avoid undue technicality, facilitate cashflow and pay now, argue later.

37.

In reaching this decision, I have not overlooked Carillion Construction Ltd v Smith [2011] EWHC 2910. As Dawnvale points out, at [56(h)] Akenhead J held:

“One strong pointer as to whether disputes are substantially the same is whether essentially the same causes of action are relied upon in the earlier and later notices of adjudication and referral notices…”

38.

Dawnvale says that the cause of action will be the same in both adjudications. I agree that in many cases this will be a strong pointer as to whether the disputes are substantially the same. However, in the present case, the second adjudication will determine the scope and extent of losses arising from repudiatory breach of contract; the question as to whether there was a repudiation will not arise for decision. On these facts I consider that there is no overlap.

39.

Accordingly I conclude that Hylgar is not prevented from referring its proposed second dispute to adjudication. This means that Dawnvale is exposed to a claim for additional heads of loss arising from the second adjudication, but my construction of the Tomlin Order means that Dawnvale is not restricted in any way from challenging either the first or second adjudication by way of a final determination in court proceedings.