Vision Homes Ltd v Lancsville Construction Ltd

An adjudicator must act within the jurisdiction conferred by the adjudication notice and the applicable appointment procedure. Under the Scheme for Construction Contracts, the notice of adjudication must precede the request to the nominating body. Non-compliance with that sequence deprives the adjudicator of jurisdiction, and prejudice need not be shown.

An adjudicator may determine the contractual consequences of changes relied on in a dispute about liquidated damages, provided the issue falls within the dispute referred and the parties have had a fair opportunity to address it. A decision remains effective where the adjudicator finds that particular contractual machinery has become inoperable, rather than deciding that the whole contract was abandoned.

Vision Homes Ltd and Lancsville Construction Ltd were parties to a JCT Design and Build contract for residential development works. Following an agreement to omit substantial external-envelope works, disputes arose about completion dates, liquidated damages and the continuing operation of contractual machinery.

LCL commenced an adjudication before Mr Bingham. Vision challenged his jurisdiction, arguing that the appointment request preceded the relevant notice, that he had decided matters outside the referral, and that the decision was unfair and uncertain. A separate adjudication before Mr Alway concerned Vision’s claim for liquidated damages. Vision applied under Part 8 for declarations concerning the validity and effect of Mr Bingham’s decision.

1. Uncertainty. Mr Bingham’s decision was sufficiently clear to be given effect. He had not held that the entire JCT contract was abandoned. The decision addressed the provisions necessary to determine whether liquidated damages remained applicable. Certain provisions had become inoperable or inconsistent with the parties’ agreement, while the remaining arrangements continued to govern the work.
2. Appointment procedure. Under the Scheme for Construction Contracts, the notice of adjudication had to precede the request to the nominating body. The second notice was served after the request for nomination, so the appointment under that notice was invalid. The request could not be treated as continuing so as to cure the defect. Non-compliance with provisions establishing the adjudicator’s jurisdiction was fatal irrespective of prejudice. Vision had not submitted to the adjudicator’s jurisdiction in the full sense.
3. Scope of referral. The dispute concerned Vision’s entitlement to liquidated damages. It was therefore within the adjudicator’s jurisdiction to determine what parts of the original contract remained operative and what effect the agreed omission had on completion dates and liquidated damages. The adjudicator had not decided that the contract was abandoned. His conclusion was a development of LCL’s pleaded case that time was at large and the liquidated-damages provisions were inapplicable.
4. Fairness and concurrent adjudications. The parties had sufficient notice that the adjudicator might conclude that the contractual machinery had broken down. There was no serious breach of natural justice. The Scheme did not prohibit two adjudications proceeding on the same dispute where no decision had yet been made in the earlier adjudication.
5. No term suspending time in Mr Alway’s adjudication was necessary for business efficacy. Mr Bingham’s fees stood or fell with the jurisdictional outcome.