UK Adjudicators October 2020 Newsletter

WWW.UKADJUDICATORS.CO.UK
OCTOBER 2020 NEWSLETTER

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EDITORS COMMENTS
The UK is facing a second lockdown and it is
not clear how extreme the restrictions the
government may need to impose will be.
Whilst construction sites are operating the
true financial impacts are still not known and
delay and disruption claims are likely to form
a good proportion of disputes moving
forward. Whether they will be resolved
amicably or not remains to be seen.
What is clear that tight margins and historical
issues led to pressure in the supply chain
which we believe has led to a significant rise
in adjudications in the second and third
quarters of this and is likely to continue into
the new year.
We are still planning on holding the annual
Edinburgh and London conferences for 2021
though they may become virtual if necessary.
We have a range of articles from across the
globe and it is of real interest that New South
Wales has removed the owner occupier
exemption.
In John Doyle Construction Ltd v Erith
Contractors Ltd [2020] EWHC 2451 (TCC), the
first judgment from the High Court following
the Supreme Court’s decision in Bresco v
Lonsdale [2020] USKC 25, Riaz Hussain QC,
was successful in resisting enforcement of an
adjudicator’s decision in favour of a company
in liquidation. On the facts it was held that
insufficient security was provided both for the
sum of the adjudicator’s decision and for the
costs of final proceedings. This case can be
contrasted with the cases where a Party in
liquidation has successfully enforced an
adjudicator’s decision namely Balfour Beatty
Civil Engineering Ltd & Anor v Astec Projects
Ltd [2020] EWHC 796 (TCC) and Styles and
Wood v GECIF Trustees Unreported 4
September 2020.
Despite the different results concerning
enforcement it is likely that parties will
adjudicate and enforce despite liquidation
and insolvency where they have access to
funds to provide both security and costs for
final proceedings.
Sean Gibbs LLB(Hons) LLM MICE FCIOB FRICS
FCIARB, is a director with Hanscomb
Intercontinental and is available to serve as an
arbitrator, adjudicator, mediator, quantum
expert and dispute board member.
sean.gibbs@hanscombintercontinental.co.uk


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IRDK VENTURES SDN BHD V.
ECONPILE (M) SDN BHD (CIVIL
APPEAL NO. W – 02 (C)(A) – 645 –
04 / 2016) (Decision dated 9th July
2020)
Summary: The issue before the Court of
Appeal was an application by the developer of
a project ‘IRDK Ventures Sdn Bhd’, the
Appellant, against the decision of the Kuala
Lumpur High Court which held in favour of the
Contractor ‘Econpile (M) Sdn Bhd’, the
Respondent, and allowed the Respondent’s
Enforcement Application of an Adjudicator’s
decision dated 30th October 2015, while
dismissing the Appellant’s Setting Aside
Application.
As a brief background, the Adjudicator’s
decision was due on 15th October 2015,
which was subsequently extended to 30th
October 2015 by agreement of both parties
under Section 12(2)(c) of the Construction
Industry Payment and Adjudication Act 2012
(the “CIPAA”). The Adjudicator’s decision was
delivered to the parties on 3rd November
2015, after confirmation from the AIAC
regarding a balance payment of RM258.32
(being the GST to be deposited with AIAC).
The Appellant’s solicitors had sent a scanned
copy of the cheque on 29th October 2015,
which was physically delivered to the AIAC on
30th October 2015 (5:20 pm, Friday), and
reached the AIAC’s Case Counsel on 2nd
November 2015 (at [11]‐[17]). “23.1 Whether
an adjudication decision delivered within time
but released to the parties only after the
payment of the GST for KLRCA’s fees is void
and/or whether there is a delay in making and
serving the Adjudication decision to the
Parties; and 23.2 Whether the Adjudicator has
the jurisdiction to decide on the payment
claims when the contract has been
terminated and/or whether the Respondent
was entitled to commence an adjudication
proceeding under CIPAA after the contract
had been terminated” (at [23]). The Court of
Appeal on 9th July 2020 dismissed the appeals
with cost (at [57]). First, the Court of Appeal
referring to sections 12(2) and 19 of CIPAA,
and Regulations 7,9, and 12 under Schedule II
of the AIAC’s Standard Terms of Appointment
held that “…having Newsletter August 2020
62 The Federal Court of Malaysia amongst
other grounds of judgement observed as
follows: “[34] The award of the arbitral
tribunal embodies the totality of the case
before it which includes inter‐alia, the relief
sought, the issues to be tired, witness
statements, submissions, summary of
findings, costs and disposition. By analogy,
this is similar to the grounds of judgment
delivered by the courts, which are distinct and
separate from the judgment or order itself.
The dispositive award is the judgment
whereas the entire award is the grounds of
judgment. It defies logic that the whole award


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containing the findings and analysis of the
arbitral tribunal of the evidence, which is akin
to the grounds of judgment be considered as
forming the terms of judgment to be
registered as a judgment of the High Court. An
analogy may also be drawn between the
approach taken by the courts in dealing with
an application under REJA and the approach
that the courts ought to take in an application
under Section 38 of the Arbitration Act 2005.
Both REJA and Section 38 provide an avenue
for the successful party to register the
judgment in Malaysia as a judgment of the
High Court” (at [34]). perused the
abovementioned provisions and after careful
perusal of the chronology of facts, we were of
the view that the act of withholding the
delivery of the decision by the Adjudicator
was with a legitimate basis. It was clear to us
there was still an outstanding fee [sic] and
payment in the form of GST that was still
pending to be paid to the KLRCA” (at [41]). It
further observed that “the cheque was sent
on a late Friday afternoon and as such, it only
natural that it will only be processed on the
next working day (at [43]). Most importantly,
the Court of Appeal held that “It is our
unanimous view that the Adjudication’s
decision was delivered within time and the
same was released to the parties soon after
confirmation that the GST payment to the
KLRCA had been duly paid pursuant to the
KLRCA Standard Terms of Appointment of the
Adjudicator as provided under Schedule II of
the KLRCA Adjudication Rules and Procedure,
to which the parties had agreed to adhere to.
Thus, it is our decision that the Adjudicator’s
decision was valid” (at [48]). Second, the
Court of Appeal referring to Sections 2 and 3
of CIPAA, Clause 25.4(d) of the PAM 2006, and
Section 17A of the Interpretation Acts 1948
and 1967, held that the Respondent had a
statutory right to refer to adjudication for
recovery of payment in the construction
industry. A remedy under the CIPAA is only
intended as an interim measure, and the
aggrieved party may still find recourse in an
arbitration proceeding and/or in Court (at
[52]‐[55]). Accordingly, it held that “we were
of the unanimous view that none of the
requirements under section 15 of CIPAA has
[sic] been established by the Appellant to
convince this Court to set aside the
Adjudicator’s decision. We were also mindful
that an adjudication decision should only be
set aside in a rare and extreme circumstances
in order to give effect to the provisional
resolution of payment disputes in
construction contracts” (at [56]).


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1155 NEPEAN HIGHWAY PTY LTD V
PROMAX BUILDING PTY LTD [2020]
VSCA 253
Under s 16(2) of the Building and Construction
Industry Security of Payment Act 2002 (the
Act), if a respondent fails to provide a
payment schedule in response to a payment
claim, and fails to pay the amount claimed by
the due date for payment, the claimant is
faced with a choice.  It can either (a) recover
the unpaid portion of the claimed amount
from the respondent as a debt due to the
claimant or (b) make an adjudication
application under section 18(1)(b) of the Act
in relation to the payment claim.

In most cases, the claimant elects to recover
the unpaid portion of the claim as a debt.
This is not only more efficient – it avoids the
need for an adjudication entirely – but
applying for adjudication introduces
additional risk. Section 18(2)(b) of the Act
requires the claimant to give the respondent a
second opportunity to provide a payment
schedule before making any adjudication
application, raising the possibility that the
respondent may realize its error and cure it by
providing a payment schedule.  Alternatively,
the adjudicator may stray into error, giving
rise to an application to set aside the
determination entirely.

The Court of Appeal’s decision in 1155
Nepean Highway Pty Ltd v Promax Building
Pty Ltd [2020] VSCA 253 highlights these risks.
The plaintiff, Promax Building Pty Ltd
(Promax), was engaged to build 26
apartments for a lump sum price of
$8,595,000.  On 15 July 2019, it submitted a
claim under s 14 the Act for a progress
payment of $2,017,382.15. No payment
schedule was issued by the respondent.

Promax then notified the respondent of its
intention to apply for adjudication and gave
the respondent a further two business days in
which to provide a payment schedule in
accordance with s 18(2) of the Act.  Again, no
payment schedule was provided.
Consequently, s 21(2A) of the Act prevented
the respondent from filing an adjudication
response, meaning that the only material
before the adjudicator was Promax's
adjudication application.

Unsurprisingly, the adjudicator issued a
determination in favour of Promax, finding
that it was entitled to the full amount
claimed, plus adjudicator’s fees and interest.


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Notwithstanding that it had failed to file a
payment schedule, the respondent vigorously
challenged the adjudicator’s determination in
subsequent judicial review proceedings. It
argued, among other things, that the
adjudicator had erred in inferring from its
failure to provide a payment schedule that no
credible challenge could be made to the value
of Promax's claim; failed to properly value the
works; and improperly relied on photos of the
works without comparing those works to the
contract drawings.

None of these arguments were accepted by
the Court, either at first instance or on appeal.
Promax was, by that measure, entirely
successful at every stage of the proceeding.
The fact that Promax had to obtain a
determination, defend it at trial, and then
again on appeal, however, highlights the risks
introduced by Promax’s decision to apply for
adjudication. In contrast to proceedings
brought to recover a debt – where s 16(4)(b)
of the Act would have narrowed the grounds
on which a determination could be challenged
‐ the adjudicator’s determination provided an
additional source of potential error that was
beyond Promax’s control. Given that, the
case is a useful reminder of the perils of
applying for adjudication where alternative
options are available.

Bill Stephenson Barrister Melbourne TEC
Chambers (MTECC)
Contact Details:
Phone: (03) 9225 6792
Mobile: 0418 352 047
Email: bstephenson@vicbar.com.au


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SHOULD THE UK FOLLOW NEW
SOUTH WALES AND AMEND THE
CONSTRUCTION ACT TO REMOVE
THE RESIDENTIAL OCCUPIER
EXCEPTION
Should the UK follow New South Wales and
amend the Construction Act to remove the
“residential occupier” exception to the
compulsory adjudication provisions in
section 106 of the Housing Grants,
Construction and Regeneration Act 1996 (the
Construction Act)?
In the United Kingdom the exception was
intended to benefit only those who occupy or
intended to occupy a property as their
residence. The ambit of this exception was
considered by the court in Westfields v. Lewis
[2013] EWHC 376 (TCC) 27 February 2013.
Section 106 of the 1996 Act provides as
follows:
"106 Provisions not applicable to contract
with residential occupier.
(1) This Part does not apply—
(a) to a construction contract with a
residential occupier…
(2) A construction contract with a residential
occupier means a construction contract which
principally relates to operations on a dwelling
which one of the parties to the contract
occupies, or intends to occupy, as his
residence.
In this subsection 'dwelling' means a dwelling‐
house or a flat; and for this purpose—
'dwelling‐house' does not include a building
containing a flat…".
Turning to New South Wales on the 1
September 2020, the Building and
Construction Industry Security of Payment
Regulation 2020 (NSW) entered in force and
repealed the existing Building and
Construction Industry Security of Payment
Regulation 2008 (NSW). Previously, owner
occupier construction contracts were exempt
from the NSW Adjudication scheme under
clause 4.1 of the Regulation and section 7(5)
of the Act which specifically provided that the
Act did not apply to these types of contracts.
Under the NSW Act, an owner occupier
construction contract means a construction
contract for the carrying out of residential
building work (within the meaning of the
Home Building Act 1989 (NSW)) on such part
of any premises as the party for whom the
work is carried out resides or proposes to
reside in. It bears a remarkable similarity to
the UK position and definition.


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The consequences of the amendments in New
South Wales are thought to benefit builders
and owner occupiers by reducing the costs
and timeframes to recover any disputed
amounts owed by owner occupiers.
The downside being that owner occupiers
entering into building contracts to undertake
residential building work at their premises or
intended premises from 1 March 2021 will
need to become familiar with the Security of
Payment legislation including the
consequences of failing to respond to a
payment claim within the prescribed
timeframes. Further if they wish to dispute
the amounts claimed by a builder in a
payment claim, they will need to ensure that a
payment schedule is served within 10
business days after the payment claim is
served.
The position will be very similar in the United
Kingdom in terms of benefits and detriments.
Very low disputes would go to the Small
Claims Court and it is arguable that
adjudication would be better than the long
wait for a decision. Lord Coulson posed the
question in his judgment in Westfields
Construction Ltd v Lewis, Is it not time for
s.106, and the other exceptions to statutory
adjudication, to be done away with, so that all
parties to a construction contract can enjoy
the benefits of adjudication? I would answer
the question that it is time and overseas
jurisdictions have recognised this.
DRBF CONNECTIONS CONFERENCE
The DRBF Connections Conference takes place
virtually over three days from the 28 to 30
October 2020.
Global speakers include Robert Fenwick
Elliott, John Papworth, Jeremy Glover and
Nicholas Gould.
For further information and registration
follow the link:
https://matchboxvirtual.com/drbf‐
connections‐conference‐2020/


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TCC COURT JUDGEMENTS
September
 Daewoo Shipbuilding And Marine
Engineering Company Ltd v Songa
Offshore Equinox Ltd & Anor [2020]
EWHC 2353 (TCC) (01 September
2020)
 Dr Jones Yeovil Ltd v The Stepping
Stone Group Ltd [2020] EWHC 2308
(TCC) (04 September 2020)
 Energy Works (Hull) Ltd v MW High
Tech Projects UK Ltd & Ors [2020]
2020)
 Essex County Council v UBB Waste
(Essex) Ltd (No. 3) [2020] EWHC 2387
 John Doyle Construction Ltd v Erith
Contractors Ltd (Rev 1) [2020] EWHC
2451 (TCC) (14 September 2020)
 The Leicester Bakery (Holdings) Ltd v
Ridge And Partners LLP [2020] EWHC
2430 (TCC) (11 September 2020)
 Municpio De Mariana & Ors v BHP
Group Plc & Anor [2020] EWHC 2471

 Premier Engineering (Lincoln) Ltd v
MW High Tech Projects UK Ltd [2020]
2020)
 Pullman Foods Ltd v The Welsh
Ministers & Anor [2020] EWHC 2521


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SCL INTERNATIONAL CONFERENCE
2021

The Society of Construction Law 9th

International Conference has been postponed
till November 2021.
The Right Honourable Lord Justice Coulson
will be a keynote speaker at the Conference.

http://www.constructionlaw2021.com/scl21

UK Adjudicators October 2020 Newsletter

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UK Adjudicators October 2020 Newsletter