Serial Drama: Benfield Construction v Trudson (Hatton)

In Benfield Construction Limited v Trudson (Hatton) Limited, Mr Justice Coulson considered the difficulties associated with what he referred to as 'serial adjudication'.

 

Benfield were engaged to construct two houses at a site in Warwickshire.  Osbornes acted as agent for Trudson.  The project was seriously delayed and an issue arose as to whether practical completion had been awarded.

 

Trudson commenced Adjudication No.1 in April 2008 seeking a declaration that practical completion had not occurred, as was contended by Benfield on the basis of a signed Handover Sheet.  Benfield did not, anywhere in the documents, make a distinction between clauses 16 and 17 of the JCT contract. 

 

The adjudicator decided that the Handover Sheet was not enough for practical completion to be deemed to have occurred and as of the date of the adjudication notice he considered it had still not occurred.  He expressly referred to clause 17.

 

Trudson then commenced a second adjudication to recover liquidated damages pursuant to the first decision.  Benfield made substantially the same points in their response as in the first adjudication.  The same adjudicator decided that Trudson was entitled to circa £75,000.

 

Benfield then commenced a third adjudication in which it contended that despite the first decision that practical completion had not occurred, Trudson had in fact taken partial possession on 17 August 2007 and they were not therefore entitled to deduct liquidated damages.  Trudson participated in the third adjudication without prejudice to its primary contention that the adjudicator did not have jurisdiction to decide the matters referred.  A different adjudicator to the other adjudications decided that partial possession should be deemed to have occurred on that date and therefore Trudson was not entitled to the liquidated damages.  He did in his decision make a clear distinction between partial possession and practical completion and explained that his decision was made on the basis of this distinction.

 

It was this decision which was the subject of the enforcement proceedings. Mr Justice Coulson refused to enforce the decision in Adjudication 3 and based his decision on the authority of HG Construction Ltd v Ashwell Homes (East Anglia) which considered the issue of serial adjudications under a JCT contract; a principle similarly set out in paragraph 9.2 of the Scheme.

 

Mr Justice Coulson found that the facts of Adjudication No.3 were substantially the same as those in Adjudication Nos.1 and 2 i.e. whether practical completion had occurred and therefore the parties were bound by the decisions in those adjudication unless finally resolved by arbitration or litigation.

Furthermore, if Benfield wanted to rely on the partial possession argument it should have raised it in the first two adjudications. If the decision in the third adjudication was upheld it would amount to an abuse of process that a further decision could be sought arising out of the same set of facts.

 

The message coming from this decision is that you should avoid withholding arguments which relate to the dispute being referred to adjudication in the hope that you might be able to use them at some time in the future. If you do this you might well lose the opportunity to rely on them in subsequent adjudications.

 

The full transcript of the case can be found here.