Second Adjudication of the same matter

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Hitachi Zosen Inova AG v John Sisk and Son Limited [2019] EWHC 495, BLM 2019, TCC

Facts

Sisk contracted to design and construct a coal-fired power station for Hitachi, at a contract price of over £44m.  There were a number of additional works. A series of adjudications followed over the value of these works.  In the 2nd adjudication, the adjudicator ruled that Hitachi had instructed an Acceleration of the works, but also that he did not have enough information to value the works generated by the Acceleration, and therefore determined value at nil.

Eventually in the 8th adjudication, the valuation information for the Acceleration works was produced which the adjudicator valued at £825,000.  Hitachi refused to pay on the basis that the adjudicator had already determined the value at nil and therefore lacked jurisdiction to make a second finding upon the same issue.

TCC Held:

  1. An adjudicator does not have jurisdiction to decide a dispute which is the same or substantially the same, as a dispute that has already been decided in a prior adjudication.
  2. There is a rule in litigation (Henderson v Henderson, 1843) that the court may stay or dismiss an action where the claimant seeks to raise in subsequent proceedings matters which were or should have been litigated in earlier proceedings. However, the principles applicable to adjudication (temporary) are not the same as those applicable to conduct of litigation (final).
  3. The focus must therefore be specifically on what the adjudicator decided. Stuart-Smith J held that the adjudicator had not decided the valuation of acceleration works for any other purpose other than answering the specific claim referred to him in the second adjudication.  Consequently, when in the 8th adjudication a further reference is made to him with full supporting valuation evidence, he was able to make a valid decision on value.  His previous decision was not binding upon him since he/she had ruled essentially upon a different “claim”.

Comment

  1. This is at first glance a surprising decision by Stuart Smith J and expressly goes against the remarks of Dyson LJ in Quietfield v Bascroft [2000] BLR 67 Court of Appeal: “Where the only difference between disputes arising from the rejection of 2 successive applications for an extension of time is that the later application makes good shortcomings of the earlier application, an adjudicator would usually have little difficulty in deciding that these two disputes are substantially the same.” The Learned Judge disagreed and remarked this was not a hard and fast rule.  So we now have two conflicting authorities.  Although the Court of Appeal normally prevails over the TCC, nevertheless the facts of the Hitachi case may be more generally applicable to the sort of problems that occur on valuation disputes, and it is likely to be relied upon more frequently.
  2. The key issue for the TCC was a public policy concern; namely that adjudications should be encouraged and maintained as an interim procedure for protecting and promoting cash flow in the construction industry. Yet again the TCC shows its 20 year commitment to supporting and sustaining the principles of the Construction Act and encouraging and protecting cash flow.

For more specialist legal advice contact our Construction & Engineering team.