The first answer is often the right one: Court of Appeal upholds Adjudicator’s ‘Primary Decision’

In Sudlows Ltd v Global Switch Estates 1 Ltd [2023] EWCA Civ 813, the Court of Appeal has provided useful guidance as to the approach to be adopted when considering potential overlap between adjudication decisions.

Background to the Case

Global engaged Sudlows to carry out fit-out and enabling works at an electricity substation in London.

The works were significantly delayed and in the fifth of a series of adjudications, the adjudicator, Mr Curtis decided Global was contractually responsible for the ductwork issues which had caused those delays. In consequence, Sudlows was awarded an extension of time of 482 days.

In subsequent adjudication 6, Sudlows sought a further 133 days EOT, and related loss and expense. The adjudicator, Mr Molloy concluded he was bound by Mr Curtis’ decision as to contractual responsibility, and as such granted Sudlows the further EOT, and c.£1 million loss and expense (the “Primary Decision”).

Unusually, the adjudicator nevertheless issued an “Alternative Decision”, in the event he was later found to have been wrong to conclude that he was bound by the previous adjudication; the “Alternative Decision” held that c.£209k was due from Sudlows to Global.

Sudlows asked the TCC to enforce the Primary Decision. The TCC found Mr Molloy had acted in breach of natural justice as he had been wrong to consider himself bound by Mr Curtis’ decision. It therefore declined to enforce the Primary Decision and, moreover, found that Global was entitled to enforce the Alternative Decision in its favour.

Sudlows appealed against the TCC’s decision.

What did the Court of Appeal Decide?

The Court of Appeal considered that whilst a court was not automatically bound by the second adjudicator’s decision, it should nevertheless “be slow to interfere with it, unless it concluded that it was clearly wrong.”

In coming to this decision, the Court of Appeal was influenced by the fact that the same issue of contractual responsibility went to the heart of both adjudications. Indeed, this was the only Relevant Event relied upon in both adjudications, making this an unusual delay case (there being no competing Relevant Events/other issues on the critical path). The first adjudicator’s determination of that issue was binding;  and, significantly, any other finding in the second adjudication would produce a result “fundamentally inconsistent” with the first adjudication.

The TCC had been wrong to enforce the Alternative Decision as this suggested an outcome which was “diametrically opposed” to the essential reasoning behind the first adjudication decision.

Sudlows’ appeal was therefore allowed and the Primary Decision was reinstated.

The Conclusion to the Case

Questions of potential overlap between adjudication decisions are often fact-sensitive and difficult to navigate. Adjudicators faced with this issue are the first to determine the extent of that potential overlap and the courts should be slow to interfere with their determination unless it is clearly wrong. Parties are nevertheless reminded that engaging in multiple adjudications increases the risk of there being overlap and the issue becoming hotly contested in any subsequent enforcement proceedings.

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This article contains information of general interest about current legal issues, but does not provide legal advice. It is prepared for the general information of our clients and other interested parties. This article should not be relied upon in any specific situation without appropriate legal advice. If you require legal advice on any of the issues raised in this article, please contact one of our specialist construction lawyers.

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