Litigation in the Technology and Construction Court is becoming increasingly like the Wild West. I see case after case in which lawyers seek to use clever – and sometimes downright specious – jurisdiction arguments to knock the wheels off parties’ efforts to enforce adjudication decisions. It reminds me of westerns in which stagecoaches hurtle across the desert pursued by Indians.
Which brings me to the latest TCC decision on enforcement of adjudication decisions, one of the most interesting and important so far. In RG Carter Limited vs Edmund Nuttall Limited, His Honour Judge Thornton QC was faced with an application by Carter for an injunction. This would have had the effect of bringing an adjudication started by Nuttall – in which an adjudicator had been appointed and the referral document had been served – to a grinding halt.
The case arose from the Norwich and Norfolk Millennium Project, which involved the construction of a landmark library in central Norwich. Nuttall is subcontractor to Carter for the sub- and superstructure works.
A dispute developed about the appropriate method for valuing the work and Nuttall referred the dispute to adjudication under clause 38A of the DOM/1 Conditions of Subcontract (1998), which both parties agreed had been incorporated into their agreement.
But Carter argued that the adjudicator, Cliff Wakefield, had not been validly appointed for three reasons. First, Nuttall had not, as Carter said it was obliged to, identified the sum total of the documentation that comprised the subcontract. Second, the subcontract identified Geoff Brewer as the parties' choice of adjudicator. And third, clause 51 of the subcontract required the parties to attempt mediation of a dispute before resorting to adjudication. Carter relied on these points in its application for an injunction preventing Wakefield from proceeding with the adjudication.
In deciding Carter's first point, Judge Thornton rejected its contention that Nuttall could not legitimately seek statutory adjudication until there was a clear agreement between the parties (or a finding in court) as to the content of the contract.
He noted that it was common ground between the parties that there was a contract to which the act applied and that it incorporated the DOM/1 standard contract conditions, including the adjudication clause. In his view, it was unnecessary for the court to probe any deeper.
It followed that Carter was not entitled to demand that Nuttall should declare its hand on all aspects of the contract as a pre-condition to adjudication. Carter argued that, even if Nuttall were entitled to appoint an adjudicator, he would be unable to decide the terms of the contract since that fell outside the scope of relief that Nuttall had requested in its adjudication notice.
- Carter tried to stop Nuttall’s adjudication on three points
- The judge ruled that none was valid
- On the last point, an ICE-style clause was found to be outside the act
The judge rejected that, distinguishing between internal jurisdictional disputes, which relate to the scope of the referred dispute, and threshold jurisdictional disputes, which depend on the ability of one of the parties to set in train the adjudication process.
As far as internal jurisdiction disputes were concerned, the right time to raise such matters in court was during the enforcement proceedings.
Moving on to Brewer's identification as the parties' chosen adjudicator, the judge noted that the document in question referred to clause 24 of the DOM/1 conditions. But in the 1998 edition, clause 24 has nothing to do with adjudication. It was clear that the reference was to clause 24 of the previous version of DOM/1, which provided for contractual, not statutory, adjudication.
The document also referred to the adjudicator's position as trustee stakeholder, once again consistent with the earlier version of DOM/1 and with contractual, rather than statutory, adjudication. In the light of all this confusion, the judge applied the contra proferentem rule, whereby any ambiguity in the terms of the contract should be construed against the party that produced it – in this case, Carter.
The final challenge to Wakefield's jurisdiction was probably the most important in terms of the long-term ramifications of the decision. Cast your mind back to the publication of the amendments to ICE 7th and the Blue Form, designed to comply with the Construction Act, and the controversy over whether the adjudication procedures, which appeared to make a decision of the engineer a pre-condition to referral of a dispute to adjudication, were act-compliant.
Although a bespoke provision, clause 41 in this contract was designed to operate in a very similar way to the ICE-type provisions. Indeed, it borrowed from that form the distinction between a "difference" and a "dispute". Until a difference had been mediated, the contract provided that it could not become a dispute for adjudication.
The judge considered that this approach clearly conflicted with section 108, which provides that a party has a right to refer a dispute to adjudication at any time and expressly provides that a dispute must include a difference. Clause 41 was therefore, in the judge's view, a clear attempt to postpone the right to refer a dispute to adjudication until mediation had taken place. As such, it did not comply with the act.
For those who support the effective operation of the act, Judge Thornton's decision is welcome.
Dominic Helps is partner in solicitor Shadbolt & Co. He can be contacted on 01737 226277 or by e-mail on email@example.com.