About 12 months ago ERDC was at odds with main contractor Skanska over interim account number seven. The specialist included in it a claim for prolonged stay on site, for significant disruption and additional supervision, for head office expenditure, financing charges, loss of opportunity and the cost of making the claim.
That little lot came to £390,000.
There was no dispute about the measured works, it was just a row about "extension of time" and "disruption". ERDC got nowhere with its claim, so it called for an adjudicator. Skanska paid up £129k and said not a penny more. The adjudicator, Mr Fiddes, agreed with that. His decision was peppered with frequent references to "insufficient information", "insufficient evidence" and so on. ERDC was short on proof.
Nine months went by and ERDC came back for another bite. Presumably it had lined up its ducks properly this time. The prolongation and extension of time claim was pretty well the same figure; so, too, the disruption and additional supervision figures; the finance charges were identical; the head office costs a tad lower.
Skanska said this was a rerun of the story and was as unimpressed as it had been the first time. ERDC again called for the adjudicator. John Hunter was appointed this time. Skanska said Mr Hunter had no right to adjudicate because the previous referee had already decided the dispute. It was what I call a "threshold jurisdiction" challenge. Mr Hunter was invited to pack his bags and skedaddle.
Pause here for a moment. It was gratifying to see that Mr Hunter took the challenge to his right to adjudicate seriously. He made a proper investigation. Some adjudicators are inclined to be offhand about such challenges, which they suspect to be a sham or try-on to delay things. Not necessarily so; indeed, it might be better to stop the adjudication unless the challenge is obviously half-baked. The waste of resources is considerable if it is ultimately declared in court that the adjudication was void. Mr Hunter wrote a reasoned decision as to why he rejected Skanska's cry of foul.
Put shortly, a dispute about the final account for loss and expense is a different dispute than that under an interim account. But be careful …
Six days later Skanska was in court seeking a declaration that Mr Hunter had no right to proceed. The Scottish judge, Lady Paton, said Mr Hunter's analysis was sound. He had a right to adjudicate. It was not a rerun of the earlier game.
You might be surprised by that decision: after all, the loss and expense claim on both occasions was identical in substance if not in all its details. My guess is that the second adjudication was probably a second bite at the same cherry. But, and this is the big difference, the loss and expense claim this time was flying under the flag of the final account. Mr Hunter and the learned judge were impressed with the argument that an account presented as an interim account was subject to quite different rules than one presented as the final account. The contract in operation was DOM 1, and it has different machinery for the two types of account.
Moreover, said the judge, the final account is at a stage in the contract when considerably more information may be available to the claimant and "different considerations and perspectives may apply". Put shortly, a dispute about the final account for loss and expense is a different dispute than that under an interim account.
That's probably right, but you should still be careful. It is too sweeping to say that you can simply come again under the final account.
There may well be discrete issues already adjudicated during the course of the works, which cannot be readjudicated.
Postscript
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or email him on info@tonybingham.co.uk.
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