Multiple Construction Disputes and Adjudication – An Analysis of Deluxe Art & Theme v Beck Interiors

23/02/2016

In early February 2016, Mr Justice Coulson  handed down judgment in the case of Deluxe Art & Theme Limited v Beck Interiors Limited [2016] EWHC 238 (TCC). The case is of significance because it is the first time the Court has provided guidance on a wider interpretation of Paragraph 8(1) of the Scheme for Construction Contracts (England and Wales) Regulations 1998, which deals with the adjudication of more than one dispute from the same parties.

Up until this decision, it was well established that:

a)      Where there is an attempt to refer more than one dispute in a single notice of adjudication without consent, and the relevant adjudication rules (including the Scheme) do not permit this, such a course will likely render any decision unenforceable.

b)      If on examination what appears to be a single dispute, is in fact, an attempt to re-adjudicate a dispute decided by a previous adjudicator, any decision will be deemed unenforceable. This is because the first Adjudicator’s decision is binding (assuming, of course, the Adjudicator appointed does not resign, which would be the correct course of action).

Deluxe Art & Theme Limited v Beck Interiors Limited has clarified that where there is an attempt to refer two or more disputes to the same Adjudicator under separate notices of adjudication at the same time without consent, and the relevant adjudication rules do not permit this, then the second decision (ie the one referred in breach of paragraph 8(1) of the Scheme) is unenforceable.

The Facts of Deluxe Art & Theme v Beck Interiors

 Deluxe Art submitted two notices of adjudication commencing two separate adjudications. The first (Adjudication Two) was submitted on 22^nd October 2015. Adjudication Two concerned a claim for an extension of time and loss and expense.  Delux Art then started a second adjudication (Adjudication Three) in a notice of adjudication dated 9^th November 2015. Adjudication Three was thus started during the currency of Adjudication Two. Adjudication Three concerned Deluxe Art’s claim to release of the first half of retention following practical completion of its works. Both adjudications were under the Scheme.

The same Adjudicator was appointed for both disputes.  This meant the Adjudicator had to deal with both adjudications within overlapping timeframes.

Beck Interiors objected to the Adjudicators appointment stating they would not consent to him dealing with two disputes at the same time.

The decision in Adjudication Two was given on 4^th December 2015. The decision in Adjudication Three was given on 11^th December 2015. 

Beck Interiors refused to recognise either decision.  They argued that their objection to the Adjudicator hearing both decisions at the same time rendered the decisions reached unenforceable.   Paragraph  8(1) of the Scheme required Beck’s consent to the same adjudicator dealing with more than one dispute, and Beck did not so consent.

Beck also claimed that the overlapping timetables, which led to both decisions being made just a week apart meant there was a breach of natural justice rendering both decisions unenforceable because:

• Dealing with both disputes at the same time led to confusion about what material was being submitted for which adjudication; and           

• Having to deal with two adjudications running in parallel meant that there was a breach of natural justice in that Beck was rushed into putting in a rejoinder in Adjudication Two

The Decision

Deluxe Art tried to argue that there was only one dispute, an angle that was quickly rejected. 

With regards to the prohibition of two or more disputes being heard at the same time without party consent Coulson J stated:

“I cannot accept that, in some way, the words of paragraph 8(1) relate only to the situation whether there are a number of different disputes on the same piece of paper (the adjudication notice), and not to the situation where there are a number of different disputes on many different such pieces of paper. That makes no sense. Moreover, there is nothing in paragraph 8(1) to allow such fine distinctions to be drawn. Whilst these type of points have only ever arisen before in cases where there was a single notice of adjudication that is pure happenstance.”

It was held that if a party wanted to refer more than one dispute to adjudication at any one time under the Scheme, it would have to secure the appointment of different adjudicators.

Coulson J also declared that there was no breach of natural justice in Adjudication Two. Beck had asked for more time to submit a rejoinder, had got such an extension, and had submitted a rejoinder accordingly. Adjudicators' case management powers to fix their own procedure had to be respected by the Court.

Adjudication Two would be enforced. Adjudication Three was a nullity for being carried out in breach of paragraph 8(1) of the Scheme and would therefore not be enforced.

In Summary

Following this decision, parties to adjudication now need to be aware an Adjudicator cannot be appointed under the Scheme for Construction Contracts (England and Wales) Regulations 1998, as amended, to deal with two separate disputes set out in two separate Notices of Adjudication at the same time, unless both parties consent.