David McLean Contractors v The Albany Building - (Queen's Bench Division - 10 November 2005)
This case concerns an application for payment of £1.3m with interest, following the decision of an adjudicator to order payment of this sum.
Paragraph 30 of the Construction Industry Council rules on adjudication, which were incorporated, states that: "No issue decided by the adjudicator may subsequently be referred for decision by another adjudicator unless the parties so agree." During a previous adjudication, the adjudicator held that there had been a valid withholding notice in relation to the deduction of liquidated and ascertained damages. One question was whether an issue decided in the first adjudication was the subject of the second adjudication.
His Honour Judge Gilliland QC gave the word 'issue' its ordinary meaning, distinguishing it from 'claim'. The adjudicator in the first adjudication decided on the validity of the withholding notice and did not go beyond that. In the second adjudication, the adjudicator dealt with the issue of whether there could be any valid deduction of liquidated damages. That was a different issue and the CIC rules did not deprive the adjudicator of jurisdiction in the second adjudication.
During the first adjudication, the adjudicator also made a declaration that several notices of non-completion served by the defendant were invalid. As a result, fresh notices were served, and so there was a claim for LADs.
The second question before the court was whether the defendant could refuse payment based on a cross-claim that it was going to be entitled to LADs if it succeeded. The judge said no. The parties had agreed to comply with the adjudicator's award and could not later refuse to do that on grounds which may or may not turn out to be valid.
Comment: The court will distinguish between different issues in the same claim in order to uphold an adjudicator's jurisdiction. The court will also keep the ethos behind the adjudication process - the maintenance of cash flow - firmly in sight. - Stavry Onissiphorou, BLM London.
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