Challenging an adjudicator’s decision – Dawnus Construction Holdings Ltd v Marsh Life Ltd

Dispute

Dawnus Construction Holdings Limited (Contractor) was engaged by Marsh Life Limited (Employer) under a JCT Design and Build, 2011 Edition contract. The contract was to design and build a retail and hotel complex (Project).

The Project suffered a number of delays and as a result, was effectively completed more than a year late. The Contractor held that the reason for the delay was because of the suspension of work, while the statutory undertaker re-routed an incorrectly placed electricity cable which pushed the weather-sensitive work into the winter, causing further delay.

Throughout the Project, there had been four adjudications. This dispute concerns the fourth, a referral by the Employer seeking a valuation of the account on termination.

Adjudication

The Contractor sought loss and expense for both delay events on the basis that the works had been affected by a relevant matter within the meaning of the contract. The adjudicator initially decided that the Contractor was entitled to just over £972,000 plus VAT. However, both parties made submissions and invited the adjudicator to correct alleged errors in his decision under the slip rule¹. The submissions included:

• The Contractor stated that there was a mathematical error;

• The Employer raised a number of issues including alleged breaches of the rules of natural justice in that the adjudicator was said to have failed to take into its defence to the loss and expense claims.

In light of the submissions, the adjudicator rejected the arguments raised by the Employer and issued a revised decision awarding the Contractor an increased sum of £1,038,000 plus VAT.

Enforcement Proceedings

The Contractor applied to enforce the adjudicator’s decision although the Employer sought to maintain its breach of natural justice challenge. The court held that the Employer had waived or elected to abandon its right to challenge the adjudicator’s decision by inviting the adjudicator to correct it under the slip rule and in absence of a general reservation of rights.

The Court explained that it was not open to a party to an adjudication to approbate and reprobate an adjudicator’s decision and that “assuming that good grounds exist on which a decision may be subject to objection, in the absence of an express reservation of rights, either the whole of the relevant decision must be accepted or the whole of it must be contested”.

Conclusion

This decision is an important reminder that if a party wishes to challenge the validity of an adjudicator’s decision they must be astute to reserve their position otherwise they are at risk of losing any right they may have had to do so.

¹ Section 108(3A) of the Housing Grants, Construction and Regeneration Act 1996 (as amended) and paragraph 22A of the Scheme of Construction Contracts 1998 (as amended) allow an adjudicator to correct a clerical or typographical error arising by accident or omission in the decision under the slip rule, either on his own initiative or at the request of one of the parties.