What does ‘dispute’ mean? When are two disputes linked? When are they not linked? If an adjudicator decides unlinked disputes, is his decision invalid? For one or both? How much sense does all this make …?
Readers of these pages will be familiar with the problems the courts have had in deciding what the word “dispute” really means in the context of the Construction Act.
It has become clear that they will not ask too much of a party that says a dispute has arisen. So, for example, silence after a demand for money has been made will suffice to crystallise a dispute, and manoeuvring by one party to create the impression of a continuing dialogue will not be tolerated. A common sense approach will be adopted.
In Bothmar vs Mayhaven Healthcare (May 2007) the Court of Appeal looked at a different aspect of the “dispute” phenomenon. The reference point is section 108 of the act, which entitles a party to a construction contract to refer “a” dispute under the contract for adjudication. So if two or more disputes are to be referred, each has to be the subject of a separate reference. It then becomes the job of the adjudicator nominating body to decide whether to appoint the same adjudicator for each reference.
So how do we tell if more than one dispute has really been referred? And what happens if, in breach of section 108, the adjudicator tries to deal with all of them at once?
In Bothmar the claimant was a contractor that was trying to enforce an adjudicator’s decision by the usual route of a court order for summary judgment. The notice of adjudication had identified disputes about the completion date and the validity of the certificate of non-completion. It had also claimed a substantial sum under valuation number nine. The adjudication took place in accordance with the Scheme for Construction Contracts, which permits parties to adjudicate at the same time on more than one dispute under the same contract, by the consent of both parties. But no such consent had been given.
The defendant employer resisted the application for summary judgment on the basis that by deciding two separate disputes the adjudicator had exceeded their jurisdiction. It is perhaps not surprising that one of the Lord Justices stated that the defence was somewhat technical.
So here we are again – back with the difficulty of defining not what constitutes a dispute, but where the boundary lies between one dispute and another.
Claims for time and money are almost always advanced in the same adjudication. What Lord Justice Dyson held in Bothmar is that if one claim is made for loss and expense and another claim is made for an extension of time they may constitute one dispute, “but only if there is a clear link between them”.
The defendant resisted the application for a summary judgment, as by deciding two separate disputes the adjudicator had exceeded his jurisdiction
So if a decision on the extension of time would affect the claim for loss and expense because that claim for loss and expense claimed preliminaries or other time-related charges, there would be only one dispute.
But if the money claim was for disruption it would have no impact on the time issue, and we would be looking at two disputes.
We might ask why, if the adjudicator’s jurisdiction is limited to one dispute, the court should not enforce their decision on the main dispute referred, and only declare the others unenforceable. The approach, however, appears to be that if there is more than one dispute, the decision cannot be severed and the entire decision falls away.
But the defendant had actively participated in the adjudication throughout. How could it say it was not bound by the decision? Surely it had lost its rights to complain?
No, said the Court of Appeal. Mayhaven had challenged the adjudicator’s jurisdiction at the start in broad terms, and this opened the door to the later submission based on the argument about two disputes.
We can’t accuse the court of undermining the parties’ intentions, because most of our construction contracts faithfully follow the wording of section 108 of the act. But they don’t have to. It would make life a lot simpler if the contracts empowered the parties to refer more than one dispute. But then the
28-day time limit might be too tight. In such circumstances adjudicators ought surely to have the power to extend the 28-day time limit unilaterally to cope with the problem.
These are serious questions. Are they discussed in the latest consultation paper? Shall we have one dispute or two about the answer?
Tony Blackler is a partner in the construction department at Manches