The Court of Appeal has given valuable guidance on the correct approach to the thorny issue of serial adjudications in Sudlows Limited v Global Switch Estates Limited  EWCA Civ 813.
The underlying facts of the case were unusual. In the first adjudication (which was in fact the 5th adjudication between the parties), the adjudicator found that the contractor (Sudlows) was entitled to an extension of time due to delays up to 18 January 2021 (“Period 1”) arising from the installation and energisation of cables onto ductwork supplied by the employer (Global Switch). However, the delays continued until, having lost adjudication no. 5, Global Switch changed the scope of Sudlows’ works and certified that practical completion had been achieved on 7 June 2021.
In adjudication no. 6, Sudlows sought (amongst other things) a further extension of time from 18 January 2021 until 7 June 2021 (“Period 2”) on the basis that: (i) the adjudicator had found in adjudication no. 5 that Global Switch bore contractual responsibility for the delays; and (ii) there were no intervening events or other causes of the delay.
Global Switch resisted a further extension of time, arguing that: (i) the adjudicator was not bound by the decision in adjudication no. 5 in respect of Period 2 and was entitled to revisit contractual responsibility for the delay; and (ii) it should be entitled to rely on new evidence which only became available after the conclusion of Period 2.
Global Switch’s argument was rejected by the adjudicator, who found that he was bound by the decision in adjudication no. 5, and so Sudlows were entitled to the extension of time for Period 2. However, the adjudicator went on to find that, if he had not been bound, he would have reached a different decision to that in adjudication no. 5.
As Global Switch refused to pay the sum found to be due, Sudlows commenced enforcement proceedings. Global Switch asserted that the adjudicator’s decision should not be enforced as he wrongly considered he was bound by the decision in adjudication no. 5. At first instance, Waksman J agreed and enforced the adjudicator’s alternative decision in adjudication no. 6. Sudlows appealed.
The Court of Appeal’s decision
The Court of Appeal allowed Sudlows’ appeal. In doing so, Coulson LJ reviewed previous authorities and identified three over-arching principles to be applied in cases concerning serial adjudications:
- The need for speed and the importance of at least temporary finality mean that the adjudicator (and, if necessary, the court on enforcement) should be encouraged to give a robust and common sense answer to the issue. It should not be a complex question of interpretation of documents and citation of authority.
- The need to look at what the first adjudicator actually decided to see if the second adjudicator has impinged on the earlier decision. Of course it can be relevant to consider the adjudication notice, the referral notice and so on, but what matters is what it was, in reality, that the adjudicator decided. It is that which cannot be re-adjudicated. The form and content of the documentation with which he was provided is of lesser relevance and can be misleading.
- The need for flexibility. That is the purpose of a test of fact and degree. It is to prevent a party from re-adjudicating a claim (or a defence) on which they have unequivocally lost, but to ensure that what is essentially a new claim or a new defence is not shut out.
Coulson LJ also explained that, whilst not an invariable guide, one way of at least testing whether the correct approach has been adopted is to consider whether, if the second adjudication is allowed to continue, it would or might lead to a result which is fundamentally incompatible with the result in the first adjudication. If in that second adjudication, one or other of the parties is asking the adjudicator to do something that is diametrically opposed to that which the first adjudicator decided, then that may be an indication that what they are seeking to do is impermissible.
He also held that the court should be slow to interfere with the adjudicator’s finding that he was bound by the adjudication no. 6 decision, unless he concluded it was clearly wrong. As Coulson LJ held, anything less runs the risk of undermining the adjudication process by encouraging repeated challenges to the adjudicator’s decision.