Aecom Design Build Ltd v Staptina Engineering Services Ltd

An adjudicator’s jurisdiction is defined by the dispute identified in the notice, read with the referral, the parties’ pre-adjudication assertions, pleadings and evidence. A dispute cannot be artificially confined by the limited answers a party says are available. The adjudicator may reach a qualified or alternative answer, provided it addresses the dispute referred.

There is no breach of natural justice merely because the adjudicator adopts a contractual interpretation not advanced in precisely that form by either party. The material issue must have been fairly canvassed, and the parties must have had an opportunity to address the relevant material. A catch-all request for appropriate declaratory relief may assist the adjudicator, but it does not confer unlimited jurisdiction.

AECOM brought a Part 8 claim concerning the third adjudication between it and Staptina under an NEC Engineering and Construction Short Subcontract. AECOM had terminated the subcontract for Reason 5 and disputed Staptina’s entitlement to payment on termination.

The adjudicator decided that AECOM was entitled in principle to deduct the cost of proven defects, but confined any deduction to the sum it would have cost Staptina to remedy the defects had termination not occurred. AECOM contended that this limitation fell outside the adjudicated dispute or, alternatively, was reached in breach of natural justice. It sought declarations that the relevant parts of the decision were unenforceable and severable.

1. The Part 8 claim was dismissed. The adjudicator’s decision remained enforceable in the respects challenged.
2. The dispute was not limited to a binary question of whether AECOM could make deductions. The Notice of Adjudication expressly concerned deductions for the cost of defects, and the surrounding documents showed that the principle governing how such deductions were to be assessed was also in issue. The parties had agreed that factual quantification would not be determined in the third adjudication, but that did not exclude deciding the applicable contractual principle.
3. The scope of the dispute was also widened, if necessary, by AECOM’s Response. AECOM relied on clause 42.1 and submitted that deductions were to be assessed by reference to the cost of third-party correction. Its correspondence and Appendix 3 placed the assessment of defect-related deductions before the adjudicator.
4. The judge applied the approach in Stellite Construction Ltd v Vascroft Contractors Ltd [2016] EWHC 792 (TCC). The court must identify what the adjudicator decided, analyse the pre-adjudication claims and assertions, determine what was referred, and consider the pleadings, evidence and issues canvassed during the adjudication. Courts should allow adjudicators latitude and avoid an unduly restrictive analysis.
5. There was no material breach of natural justice. The subcontract, termination letter, correspondence and Appendix 3 were before both parties, and the parties made submissions on the relevant issue. Under the principles explained in Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC) and Roe Brickwork Ltd v Wates Construction Ltd [2013] EWHC 3417 (TCC), an adjudicator may decide an issue on a basis arising from the material and issues fairly canvassed, even if neither party advanced that precise answer.
6. The wording inviting such declaration as the adjudicator deemed proper was relevant but not determinative. It did not give the adjudicator carte blanche to decide matters outside the referred dispute.
7. The judge also observed that a later adjudication must treat an earlier adjudicator’s decision as binding unless it has been overturned or found unenforceable. A party cannot proceed on the assumption that a challenged decision has already been set aside.