HG Construction Ltd v Ashwell Homes (East Anglia) Ltd

An adjudicator’s decision binds the parties until final determination or subsequent agreement. A party cannot obtain a further adjudication of the same or substantially the same dispute by developing another factual or legal argument against the result.

The court must examine the terms, scope and extent of both the dispute referred and the earlier decision. Whether two disputes are substantially the same is a question of fact and degree. Complete identity of every issue is unnecessary. An adjudicator asked to revisit a matter already decided should decline to decide it or resign.

A contractor applied for summary judgment to enforce an adjudication decision requiring the employer to refund £184,627 in liquidated and ascertained damages. An earlier adjudicator had decided that the contractual provisions governing those damages were valid and enforceable.

The contractor contended that the later adjudication concerned a distinct issue: whether partial possession made it impossible to value the sectional works and calculate the proportional reduction in damages. The central question was whether that issue was the same or substantially the same as the dispute referred and decided in the first adjudication.

1. The application for summary judgment was dismissed. Clause 39A.7.1 made the first adjudication decision binding until the dispute was finally determined by arbitration or legal proceedings, or resolved by a later written agreement. The parties therefore could not rely upon a later adjudication decision to the extent that it purported to decide a matter already determined by the first adjudicator.

2. The principles governing successive adjudications were the same in substance whether the applicable procedure arose under the contractual clause or the Scheme for Construction Contracts (England and Wales) Regulation 1998 (SI 1998 No 649). The court must analyse the terms, scope and extent of the earlier reference and the earlier decision. It must ask whether the later dispute is the same or substantially the same as the earlier dispute. The latter inquiry is one of fact and degree: Quietfield Ltd v Vascroft Construction Ltd [2006] EWCA Civ 1737 applied.

3. An adjudicator should consider, on an objection or of his own volition, whether an existing binding adjudication decision covers the matter referred. If it does, the adjudicator should decline to determine that matter or resign if it is the only matter referred. Requiring complete identity of every factual and legal issue would permit re-adjudication of disputes which were substantively the same and would defeat the purpose of the binding-effect clause.

4. The first dispute was not confined to the contractor’s original objections. It extended to any then-available contention that the contractual provisions for deducting liquidated damages were invalid or unenforceable. During the first adjudication the contractor expressly argued that the sectional works could not be valued and that the proportional reduction following partial possession could not be calculated. The first adjudicator rejected the underlying uncertainty and decided that the liquidated damages provisions were valid and enforceable.

5. The later reference repeated, or at most developed, that valuation argument. It did not arise from a new factual position. Even if the argument concerning allocation of the contract sum was independent of the earlier work-allocation argument, it remained substantially the same dispute about whether sectional values could be derived from the contract. The contrary finding in the third adjudication was therefore not binding. The first decision remained binding, and the contractor could not enforce the award requiring repayment of £184,627.

This was a first-instance application to enforce adjudication decisions. In earlier proceedings under CPR Part 8 concerning the second adjudication, the parties obtained a consent order declaring that the first adjudication decision was valid and binding, while the parts of the second decision addressing the validity of the liquidated damages provisions were not binding.