Vertase Fli Ltd V Squibb Group Ltd
Technology and Construction Court
13th November 2011
The sub-contractor contended that the delay to the completion of its works was caused by matters for which the contractor was responsible and began an adjudication in which it claimed a full extension of time and payment of consequential loss and damage. The adjudicator awarded the sub-contractor a specified sum in respect of loss and damage and a partial extension of time. The adjudicator in rejecting the contractor’s counterclaim for liquidated damages found that the contractor had failed to issue a compliant withholding notice. He also stated that the sub-contractor had asserted that the contractor had no entitlement to liquidated damages on the ground that unless it could demonstrate an equivalent loss under the main contract. The contractor began a second adjudication in which it claimed damages for breach of contract and/or delay before the same adjudicator. Despite the finding in the first adjudication that the contractor had no entitlement to deduct liquidated damages, the adjudicator in the second adjudication awarded the contractor a specified sum which included an amount in respect of liquidated damages.
Edwards-Stuart J held that the decision in the second adjudication should not be enforced. It was clear in the light of the authorities that the adjudicator could not decide the same issue again in the second adjudication. However, that was exactly what he purported to do in his decision by finding that the sub-contractor had not established that the liquidated damages provision in the contract was unenforceable. The adjudicator clearly found in his decision in the first adjudication that the contractor had no entitlement to claim or deduct liquidated damages under the sub-contract unless it could demonstrate that it had sustained a similar loss under the main contract. The adjudicator’s statement in his decision in the first adjudication setting out the sub-contractor’s assertion that the contractor (also) had no such entitlement because it had not served an effective withholding notice should be regarded as his own conclusion and part of his reasoning for that conclusion and was not simply a continuation of his summary of the argument being put forward by the sub-contractor to that effect. The adjudicator therefore changed his mind in the second adjudication about this conclusion when he awarded the contractor a specified sum which included an amount in respect of liquidated damages.