Benfield Construction Limited v Trudson (Hatton) Limited

Case reference: 
[2008] EWHC 2333 (TCC)
Wednesday, 17 September 2008

Key terms: 
Adjudication - same dispute - Jurisdiction

There were three adjudications between the parties. In the first, the Defendant ("Trudson") sought a declaration that practical completion had not yet occurred as at 17 August 2007. The first adjudicator agreed. In the second adjudication, Trudson sought and were awarded liquidated damages. In the third adjudication, the Claimant ("Benfield") said that Trudson had taken partial possession of the building and was therefore not entitled to liquidated damages. Trudson said that the third adjudicator had no jurisdiction to address this issue.

However, the third adjudicator considered that practical completion should have been deemed to take place on the date of 17 August 2007. His view was that practical completion and partial possession were two different aspects of the same contract. In Mr Justice Coulson's view, the relevant principles when considering the "same dispute" issue were as follows:
(i) the parties are bound by the decision of an adjudicator on a dispute until it is finally determined;
(ii) the parties cannot seek a further decision by the adjudicator if the dispute or difference in question has already been subject of a decision by an adjudicator;
(iii) the extent to which a decision is binding will depend on analysis of the term, scope and extent of the dispute referred to adjudication;
(iv) one must therefore ask whether the new dispute is the same or substantially the same and/or whether the adjudicator has decided a dispute or difference which is the same or fundamentally the same as the new dispute; and
(v) whether one dispute is the same or substantially the same as another is a question of fact.

Mr Justice Coulson asked whether there were real grounds for concluding that there was a substantial overlap between what the third adjudicator was asked to decide and what had already been decided by the first adjudicator. In the first adjudication it was decided that practical completion had not taken place on 17 August 2007, whilst in the third adjudication it was decided that practical completion must be deemed to have taken place on the same date. In the Judge's view, it was difficult to imagine a more obvious case of overlap and indeed a starker case of fundamentally contrary decisions. He was therefore in no doubt that the third adjudicator did not have the necessary jurisdiction to deal with the alleged dispute.
There were no different material facts presented in the third adjudication. In fact, it turned out that all of the adjudications had been based on the same handover form. The Judge also thought it important to distinguish between the underlying dispute between the parties and the issues and legal arguments which they raised when setting out their side of the dispute. Whilst partial possession and practical completion are different legal concepts and depending on the facts may give rise to different issues or even different disputes, what matters is what the underlying dispute was that existed between the parties at the time of the first and second adjudications. That dispute was whether practical completion under the terms of the contract could be said to have occurred on 17 August and if so whether liquidated damages were due to the employer. Therefore, the legal concept of partial possession only mattered because it was a way, and perhaps the only way which Benfield could argue that practical completion had occurred. Partial possession was here, an aspect of an issue to be determined within the resolution of the underlying dispute. Once the question of practical completion and liquidated damages had been decided by the first adjudicator, those decisions could not be opened up or, in the words of the Judge "comprehensively demolished" as they had been here by the third adjudicator. As the Judge noted:

"adjudication is supposed to be a quick one-off event; it should not be allowed to become a process by which a series of decisions by different people can be sought every time a new issue or a new way of putting a case occurs to one or other of the contracting parties. If, as it obviously was, the Claimant was unhappy with the results in adjudications 1 and 2, then the Claimant should have gone either to an arbitrator or to a Court in order to challenge those decisions."

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