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s105(2) of the Construction Act and an Adjudicator’s Jurisdiction

In the recent case of Cleveland Bridge (UK) Limited v Whessoe-Volker Stevin Joint Venture1, Ramsey J sitting in the Technology & Construction Court considered the interpretation of s105(2) of the Housing Grants, Construction and Regeneration Act 1996 (“the Act”) and the approach of the courts to an application for summary judgment, where the adjudicator had jurisdiction to determine part but not all of the matters referred.

Facts:

The case concerned a subcontract entered into in February 2006 between Cleveland Bridge (UK) Limited (“Cleveland Bridge”) and Whessoe-Volker Stevin Joint Venture (the “Joint Venture”). Under the subcontract, the Joint Venture engaged Cleveland Bridge as contractor to carry out works at the Dragon Liquefied Natural Gas (LNG) terminal in Milford Haven. At the terminal LNG was off-loaded from sea carriers, pumped into pipes and tanks for storage purposes, re-heated for conversation into gas and then pumped into the national gas transmission pipeline.

Dispute:

In March 2009, the Joint Venture agreed Cleveland Bridge’s Final Account, which left an outstanding sum of £365,125 due to Cleveland Bridge. The Joint Venture failed to make payment. In January 2010, Cleveland Bridge commenced adjudication proceedings on this point and an adjudicator was appointed by the chairman of TeSCA.

Adjudication:

The Joint Venture challenged the jurisdiction of the Adjudicator and took part in the adjudication expressly without prejudice to its position that the Adjudicator did not have jurisdiction. The Adjudicator held that the Joint Venture’s defences were without merit and that it should pay Cleveland Bridge the sum of £365,125, in addition to interest and the Adjudicator’s fees. The Joint Venture failed to comply with the decision and Cleveland Bridge sought to enforce it by way of a summary judgment application brought in the TCC.

Court Decision:

Ramsey J held that the subcontract between Cleveland Bridge and the Joint Venture consisted in part of construction operations falling within section 105(1) of the Act, but that part of the works (in particular the operations which consisted of the erection of steelwork to the piperacks and pipe bridges) were not ‘construction operations’ by reason of section 105(2)(c)(ii).

As the Adjudicator’s decision was made in relation to one dispute (part of which was within her jurisdiction and part of which was outside her jurisdiction) the Court held that in those circumstances the decision was not a valid decision, it could not be severed and could not be enforced.

Advice:

It is evident that the stumbling block in this case involved an adjudicator seeking to make a decision dealing with issues both inside and outside of her jurisdiction. A party referring a matter to adjudication should request that the adjudicator make their decision in such a way as to allow for severance; though the adjudicator will not be bound to do so. If the adjudicator had held that she had jurisdiction over the whole dispute, but that in the alternative she had jurisdiction as to part of the dispute (providing her decision and payment of monies accordingly) this would have allowed the court to sever and enforce that part for which she had jurisdiction.

If you would like advise in respect of any of the issues dealt with in this case, or any other construction issues, please contact Anna-Liisa Walden.

Disclaimer:

This article is provided for update and guidance only. It should not be relied upon and professional legal advice should be obtained for specific queries.

1Cleveland Bridge (UK) Limited v Whessoe-Volker Stevin Joint Venture (a partnership comprising Whessoe Oil & Gas Limited and Volker Stevin Construction Europe BV) [2010] EWHC 1076 (TCC)