Stellite Construction Ltd v Vascroft Contractors Ltd

An adjudicator may decide an issue on a basis for which neither party expressly contended, provided the relevant material was before the parties and the resulting issues were fairly canvassed. Natural justice is breached where the adjudicator determines a decisive or materially important point outside the matters advanced without giving the parties an opportunity to comment. The inquiry must reflect the compressed and provisional nature of construction adjudication. An adjudicator’s jurisdiction is defined by the dispute referred, construed broadly in context, including defences to the claim. It does not extend to a separate claim which was neither referred nor raised as a defence. A finding of the reasonable time for completion, relevant only to unliquidated damages, was outside the jurisdiction of an adjudicator appointed to determine a claim for liquidated damages.

Stellite engaged Vascroft under a contract incorporating the JCT Standard Building Contract Without Quantities 2011 for shell and core works. After delay, Stellite referred a claim for liquidated damages to adjudication. Vascroft defended the claim on several grounds, including that acts of prevention had set time at large.

The adjudicator held that time was at large because Phase 2 works carried out under a letter of intent fell outside the contractual extension-of-time provisions. He then determined that a reasonable completion date was 5 March 2016. Stellite sought declarations that the decision was unenforceable for breach of natural justice and, as to the reasonable completion date, for want of jurisdiction.

1. Issue 1: time at large. The question was whether the issues arising from the adjudicator’s conclusion that the contract did not permit extensions of time for delay caused by the letter of intent and Phase 2 works had been fairly canvassed. The parties had fully debated whether time was at large, acts of prevention, the effect of the Phase 2 works and the contractual extension-of-time mechanism.
2. The adjudicator had applied the law and material already before him, particularly the prevention-principle analysis in Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (No 2) [2007] EWHC 447 (TCC). He had not relied on a new authority, external information or undisclosed expertise. The fact that the parties had advanced the issues from different angles did not make the procedure unfair.
3. The compressed timetable and provisional nature of adjudication were relevant to assessing fairness, without reducing the obligation to comply with natural justice. An adjudicator may reach a conclusion on an important point from material before him where the resulting issues have been fairly canvassed. The adjudicator had therefore not breached natural justice. The claim for declaratory relief on Issue 1 was dismissed.
4. Issue 2: reasonable completion date. The adjudicator exceeded his jurisdiction by deciding that the works had to be completed by 5 March 2016. The reference concerned Stellite’s claim for liquidated damages. The words seeking such other amount as the adjudicator deemed appropriate permitted a lesser liquidated-damages award, for example if Vascroft established an extension of time. They did not confer jurisdiction to determine a separate claim for unliquidated damages.
5. Vascroft’s defences concerning contractual extensions of time did not enlarge the jurisdiction to decide the reasonable completion date after time had been set at large. That issue was distinct, had not been raised, and was not necessary to determine Stellite’s liquidated-damages claim. The finding was severable. The relevant part of the decision, namely section 4, paragraphs 70–73, and paragraph 75.5, was unenforceable. Declaratory relief on Issue 2 was granted.

First instance decision. The judgment itself does not state any prior appellate history.