MCMS Blog

Matt Molloy and Jonathan Cope give an adjudicator's opinion on disputes and dispute avoidance in the construction and engineering sectors.

A Christmas (adjudication) Carol

Posted by MCMS on 6th December 2011.

Jonathan Cope, director:

Well, Christmas is almost upon us and the television is already full of adverts of what we can look forward to watching over the festive period. As well as another heart-stopping instalment of Downton Abbey, I’m rather hoping A Christmas Carol will be on (the Muppets version obviously).

Rather like Ebenezer Scrooge in the Dickens classic, I can’t help thinking that some of the parties who end up in serial adjudications, which are followed by enforcements in the TCC, appeals, deals, etc, are haunted by the “Ghost of Adjudications Past”, or perhaps wish that they had been visited by the “Ghost of Adjudications Yet to Come” at the outset of their disputes, or even before they entered into the contract! One such set of parties might be those involved in PPL v Corinthian Nominees.

PPL v Corinthian Nominees

To give you some background, Corinthian had employed PPL to build a new five bedroom house. The contract sum was about £1.6 million so I’m guessing it was more Southfork than Barratt home. Corinthian terminated the contract and the parties ended up in no less than six adjudications.

In the sixth adjudication, the adjudicator decided that Corinthian should pay PPL about £850,000 (including £203,000 in interest). Corinthian refused to pay so everyone trotted off to the shiny new Rolls Building for the enforcement proceedings (no doubt being careful to avoid Mr Abramovich and his friends).

The judgment covers a couple of interesting issues, the first being the adjudicator’s findings on interest. I know that Matt is going to talk about interest next week, so I won’t spoil things by giving the result away. The second was stays of execution and is related to my last blog about NAP v Sun-Land.

Stay of execution

In the same manner as Sun-Land, Corinthian applied for a stay of the enforcement of the adjudicator’s decision on the grounds that there was real doubt that PPL would be able to repay the sum awarded by the sixth adjudicator if the outcome of the dispute differed at a later trial. However, unlike Sun-Land (who achieved a partial stay), Corinthian’s application failed altogether.

Both NAP and PPL relied on the last of the six principles set out in Wimbledon Construction v Derek Vago to resist the applications for a stay. That is, they both argued that their current financial position was:

“due, either wholly, or in a significant part, to the defendant’s failure to pay those sums which were awarded by the adjudicator”.

However, while in NAP v Sun-Land, the court was not prepared to rely on the adjudicator’s finding that a payment should have been made some time ago by Sun-Land to NAP when determining whether NAP’s current financial position had been caused by Sun-Land’s failure to pay sums due, the court was prepared to rely on such a finding in PPL v Corinthian Nominees.

In particular, the court noted that PPL’s working capital when the works started was £200,000 and to undertake a £1.6 million project it therefore needed to be:

“paid promptly for work that it had properly carried out and was not penalised for delays that it had not caused”.

Relying on the decisions in the six adjudications between the parties, the court found that this had not happened, which was “bound to create serious financial difficulties” for PPL.

Court’s approach differs

No doubt the judge had good reason for this seemingly different approach and, perhaps, the cases turned on their own facts. Nevertheless, these decisions may result in some interesting arguments in future applications for stays. Either way, regardless that PPL managed to resist the application for a stay, after six adjudications and a trip to the TCC, I’m guessing both parties wish they had been visited by the “Ghost of Adjudications Yet to Come” some time ago.

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