Quietfield Ltd v Vascroft Contractors Ltd

An adjudicator’s decision under a construction contract is temporarily binding. A party may not refer the same or substantially the same dispute for a second adjudication. The court must identify what the first adjudicator actually decided, principally by examining the decision and the scope of the dispute referred.

Whether successive disputes are substantially the same is a question of fact and degree. Materially different causes of delay, particulars of their effects or critical-path analysis may produce a different dispute. A contractor resisting liquidated damages may therefore advance an extension-of-time defence that differs substantially from a claim rejected in an earlier adjudication. An adjudicator who wrongly refuses to consider such a defence breaches natural justice, so the resulting decision cannot be enforced.

Quietfield Ltd employed Vascroft Contractors Ltd to renovate a mansion under a construction contract containing extension-of-time and liquidated-damages provisions. In a first adjudication, Vascroft failed to establish an extension of time on the grounds advanced in two application letters. In a third adjudication, Quietfield obtained an award of liquidated damages after the adjudicator refused to consider Vascroft’s substantially more extensive delay case and critical-path analysis.

Jackson J dismissed Quietfield’s summary judgment claim to enforce that award: [2006] EWHC 174 (TCC). The central issue on Quietfield’s appeal was whether the first adjudication conclusively determined the extension-of-time defence advanced in the third adjudication.

1. Appeal dismissed. The first and third adjudications concerned substantially different disputes. The adjudicator in the third adjudication was wrong to treat his first decision as conclusive and to refuse to consider the contractor’s later extension-of-time case. That refusal excluded the contractor’s only substantive defence and amounted to a breach of natural justice. The third decision was therefore unenforceable.

2. Section 108(3) of the Housing Grants, Construction and Regeneration Act 1996 and paragraphs 9(2) and 23 of the Scheme give an adjudicator’s decision temporary binding finality. More than one adjudication is permissible, but a second adjudicator must not decide again a dispute already decided. Paragraph 9(2) requires resignation where the dispute is the same or substantially the same as one previously referred and decided.

3. To determine the reach of the first decision, the court must ask what the first adjudicator actually decided. The decision itself is the first source. Its scope will normally be defined by the dispute referred, as identified from the notice of adjudication and referral documents, although the parties may agree to vary that scope during the adjudication.

4. The first adjudication was confined to the extension-of-time grounds contained in two identified letters. The later defence introduced substantially more extensive causes of delay, materially different particulars and a new critical-path analysis. It was not merely the earlier claim presented with improved evidence. A composite delay claim may fall outside an earlier dispute even where it includes events previously relied upon, if those events operate with new causes of delay on a different critical path.

5. Dyson LJ added that whether two disputes are substantially the same is a question of fact and degree. A later claim which merely cures shortcomings in an earlier application will usually concern substantially the same dispute. By contrast, materially different events, particulars or estimates may support a genuinely different dispute.

6. Dyson LJ further explained that the contract permitted later notices containing new material which could reasonably lead the architect to a different conclusion. A contractor could rely again on the same Relevant Event if it supplied materially different particulars of its effects or a different estimate of delay. Lady Smith LJ agreed with both judgments.

1. Court of Appeal (Civil Division): The court dismissed Quietfield’s appeal and upheld the refusal to enforce the third adjudicator’s decision: [2006] EWCA Civ 1737.

2. Technology and Construction Court: Jackson J dismissed Quietfield’s summary judgment claim to enforce the adjudicator’s decision because the adjudicator had wrongly refused to consider a substantially different extension-of-time defence: [2006] EWHC 174 (TCC).

3. Permission to appeal: Jackson J refused permission. Brooke LJ subsequently granted permission on the papers.