Sudlows v. Global Switch Estates (21 December 2022) is another TCC case concerning the disputed right to enforce an adjudicator's decision and one in which the 'winner' ended up paying the loser £209,000. That does not seem very fair.

So, what went wrong for Sudlows? Well, to use chocolate terminology a caramel egg and a creme egg may look the same, i.e. egg shaped, each have an outer layer of milk chocolate and be manufactured by the same people, but they are not the same or fundamentally the same. Therefore, just because you have argued over a caramel egg does not mean you cannot argue over a creme egg.

Background

Sudlows was awarded £996k plus VAT by the adjudicator and wanted its money but Global said 'no' because the adjudicator had acted in breach of natural justice (i.e. acted unfairly) believing he was bound by the decision of an earlier adjudicator. He was wrong to think this and, therefore, his alternative decision that Sudlows owed Global £209k plus VAT was the correct one.

In the previous adjudication no. 5, a different adjudicator had concluded in his 82 page decision (they do seem to be getting longer these days) and in return for a fee of some £90,000 (worth every penny) that Sudlows was entitled to an EOT for Section 2 of the Works. As a consequence of this, Global was not entitled to levy LADs.

In the current adjudication no. 6, Sudlows sought an additional EOT for Section 2 on the basis of the same Relevant Event (this was a JCT DB 2011 contract) and argued that as nothing material had changed adjudicator no. 6 was bound by adjudicator no. 5's decision. Sudlows included, for good measure, in adjudication no. 6 a full loss and/or expense claim.

Global, for its part, argued that it was entitled to challenge the merits of this latest EOT and loss and/or expense claim even if (which is accepted) it could not dispute the previous adjudication.

The adjudicator proceeded (with Sudlows' but not Global's express agreement) to decide adjudication no. 6 on two alternative bases: first, on the basis that he was bound by the previous decision; and the second, on the basis that he was not. His subsequent decision included, where relevant, alternative findings but the end result was a decision that Sudlows was entitled to an additional EOT and also loss and/or expense of £990k. However, his alternative conclusion was that Sudlows owed Global £209k.

What the judge decided

The key question was whether adjudicator no. 6 was bound by adjudicator no.5's decision in respect of the Relevant Event which was the basis for the EOT claims. If he was, he would have to grant Sudlows an additional EOT and loss and/or expense. If he was not, adjudicator no. 6 could take into account new evidence and assess the matter differently. 

In Brown v. CBS (2016) the Court of Appeal had referred to whether the subsequent dispute (no. 6) was the same or substantially the same as the previous one (no. 5) and whether the adjudicator had decided a dispute which was the same or fundamentally the same as the previous one. This was, in each case, a question of fact and degree having regard to what the previous adjudicator (no. 5) decided, because that would help determine how much or how little remained for consideration by the subsequent adjudicator (no. 6). This was clear from the earlier Court of Appeal decision in Quietfield v. Vascroft (2006).

Putting this into context, just because Sudllows' claim in adjudication no. 6 was for an additional EOT for the same Relevant Event as in adjudication no. 5 did not mean adjudicator no. 6 was bound by it, i.e. he did not automatically have to find in Sudlows' favour. It was also necessary to take into account the circumstances of and material relating to the relevant part of the dispute, namely Sudlows' claim for an additional EOT.

On the facts of this case (and each case will be fact-dependent) Global was not merely repeating what it had said in its defence in adjudication no. 5 but was relying on new evidence. In addition, this new evidence had had a "dramatic effect" on the adjudicator no. 6 in terms of his findings. Adjudication no. 6 was also a matter where Global was putting forward a defence to a new adjudication for an additional EOT relating to a different time period. In short, the existence or otherwise of the same Relevant Event in adjudications no. 5 and no. 6 was insufficient to mean both disputes were the same or substantially the same.

Based on the facts before him, the judge decided the disputes in adjudications no.5 and no. 6 were different; they were not the same or substantially the same. This meant that adjudicator no. 6 did have jurisdiction to consider the merits of the dispute before him and his decision that he was bound by the previous adjudicator's decision was wrong. This resulted in a consequent breach of natural justice meaning his decision in favour of Sudlows could not be enforced.

The judge then decided adjudicator no. 6 had jurisdiction to reach his alternative findings and the parties, by their extensive submissions, had agreed to this. Further, taking into account the purpose of having adjudication decisions the judge decided he would enforce adjudicator no. 6's alternative finding that Global was entitled to £209k plus VAT.

So, Sudlows went into court in mid-December 2022 expecting to get a £996k Christmas present, only to end up with a bill for £209k.

Conclusion

Together, the 1996 Act and the accompanying Scheme for adjudication make it clear that once an adjudicator has decided on a dispute, that dispute cannot be referred to adjudication a second time, i.e. the decision is binding on the parties until finally resolved by legal proceedings etc. Despite this, the issue has been considered several times by the courts, including by the Court of Appeal. This is because no 'losing' party likes to pay if there is a glimmer of hope the adjudicator's decision can be set aside.

In the Sudlows case adjudication no. 5 was not binding on adjudication no. 6 because, on the facts, the two disputes were not the same or substantially the same. Putting this another way, one was a caramel egg and the other a classic creme egg.