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The defendant, the adjudicator, the claimant and its Part 8 application

Posted by Practical Law Construction on 23rd January 2009.

Lynne McCafferty, barrister, 4 Pump Court:

I agree with the recent MCMS post that 2009 is likely to see an increased use of the CPR Part 8 procedure to bring jurisdictional challenges before or during an adjudication.

Two recent cases demonstrate that both referring and responding parties can use the Part 8 procedure to:

Vitpol Building Service v Samen

The first case concerned proceedings brought by a referring party before an adjudication was started.  In Vitpol Building Service v Samen [2008] EWHC 2283, the Technology and Construction Court (TCC) confirmed that it has jurisdiction to hear a Part 8 claim concerning the existence and terms of a contract, where that decision will determine whether the claimant has the right to adjudicate. The parties had almost completed the pre-action protocol process in relation to that dispute, but the claimant had not referred the underlying dispute to adjudication.

This judgment confirms that, if a jurisdictional challenge is anticipated, the claimant can (and maybe should) bring Part 8 proceedings for a declaration in advance of referring the dispute to adjudication.  This has the advantage that the claimant would know at an early stage whether it has a right to adjudicate, with any uncertainty over the existence and terms of the contract resolved before embarking on adjudication.  This would avoid the delay and costs associated with a responding party’s later challenge to jurisdiction in enforcement proceedings.

Dorchester Hotel Ltd v Vivid Interiors Ltd

In the second case, Dorchester Hotel Ltd v Vivid Interiors Ltd [2009] EWHC 70 (TCC), the responding party sought clarification from the court under the Part 8 procedure during the adjudication, as soon as it became clear that natural justice issues had arisen. This was a “kitchen sink” final account claim referred to adjudication at 4pm on 19 December 2008:

  • The referring party served 37 lever arch files of documents, including new evidence (witness statements and expert reports).
  • The final account build-up was different from the final account discussed between the parties pre-adjudication.

The responding party issued a Part 8 claim for a declaration that the adjudication timetable would lead to breach of natural justice because it had insufficient time to have a fair opportunity to respond. The referring party opposed the claim on the basis that the court had no jurisdiction to interfere at this stage, and that the claim was premature.

Mr Justice Coulson rejected the jurisdiction argument, citing Vitpol v Samen and CJP Builders Ltd v William Verry Ltd [2008] EWHC 2025 (TCC).  Although Coulson J refused to grant the declaration (as he considered that he was not in a position to say whether there would be a breach of natural justice), nevertheless he criticised the referring party’s conduct, which was designed to obtain maximum tactical advantage.

Coulson J’s judgment has the effect of casting a shadow of uncertainty over the ongoing adjudication proceedings, raising the distinct possibility of a future challenge to the adjudicator’s decision on grounds of breach of natural justice and jurisdiction. He warned that the adjudicator would have to consider his duties (in light of the decision in CJP v Verry) carefully.

Coulson J reserved the costs of the application on the basis that, if it came to enforcement, it might be that the responding party’s points were vindicated; but if the adjudicator’s decision was accepted by both parties, then the costs would follow the event.

What lessons can we learn from this?

The practical lesson that can be learned from these recent cases is that parties to adjudication proceedings can make good tactical use of the Part 8 procedure.  However, I doubt whether, in practice, this will have the effect of reducing the number of enforcement proceedings issued. In my experience, losing parties are making increasingly creative challenges to adjudicators’ decisions in this uncertain economic climate.

One Response to “The defendant, the adjudicator, the claimant and its Part 8 application”

  1. It’s interesting to note that Lynne sees a trend that includes “increasingly creative challenges” to adjudicator’s decisions, despite the TCC’s current approach to imposing costs sanctions on parties.

    Nearly all successful claimants recover their costs when they enforce an adjudicator’s decision in the TCC. Increasingly, the TCC is prepared to order costs on an indemnity basis, where the defendant’s jurisdiction argument (or other defence) is without merit and has been advanced only to delay payment of the adjudicator’s decision (see, for example, Legal update, TCC on breach of natural justice in adjudication).

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