Judicial review not available – Proceed by Arbitration

Sam Pemberton Civil Limited v S Robertson & Ors

In this month’s article I consider the decision above, where Landsdale Development Limited (“LDL”), looked to judicially review two unfavourable Adjudications made against it under the Construction Contracts Act 2002 (CCA). In this decision Justice Whata finds that judicial review is not appropriate forum to determine these matters, and the matters are more properly addressed (after full argument), at Arbitration.

 

Facts

LDL contracted Sam Pemberton Civil Limited (SPCL) to carry out civil works for it in 2015. Whilst the works were ultimately completed by SPCL, the Engineer to the contract ruled that once liquidated damages were applied to the delays caused by SPCL, SPCL owed the sum of $215,674.07 to LDL. Needless to say SPCL was left unsatisfied with this outcome, (it had been pursuing the sum of $1,530,974.50). It therefore chose to bring an Adjudication against LDL in respect of the Engineer’s decision as to its final claim. The Adjudication brought was effectively a review of the Engineer’s determination. In response to the Adjudication claim LDL attempted to enlarge the Adjudication claim to include its claim for liquidated damages which it no doubt considered the Engineer had under assessed. The Adjudicator refused to enlarge the Adjudication claim to include this in its terms, albeit the liquidated damages were considered in the context of a set off. 

The outcome for SPCL in the Adjudication was unfavourable once again. SPCL’s claim failed in its entirety and it was ruled that LDL was entitled to a set off liquidated damages in its favour of $1.09m. LDL then commenced in March 2023 a separate Adjudication seeking its liquidated damages. The Second Adjudicator found in favour of LDL for liquidated damages. Substantial cost awards were made against SPCL in both Adjudications. 

SPCL then brought judicial review proceedings in respect of both Adjudications in the High Court, on the basis that errors of law had been made by the Adjudicators. The two errors of law at stake were summarised as follows:

(a)  Whether LDL’s claim to liquidated damages was time barred as it commenced its claim in March 2023, more than 6 years after the date of completion of the project;

(b)  Whether the Adjudicators failed to apply the correct threshold for costs in claims under the CCA.

Whilst the High Court never really went onto address these issues, instead postponing their resolution to an Arbitration that was before ex High Court Justice, Paul Heath, it was Justice Whata’s comments upon the limited scope of judicial review in the context of CCA adjudications which is of interest in the context of this article. I summarise these comments below. 

  • Applying the law as laid down in Rees v Firth (COA) judicial review of adjudications under the CCA, are not limited to issues of jurisdictional error. However, the statutory context is such that a person who does not accept an adjudicator’s determination should litigate, arbitrate or mediate the underlying dispute rather than seek relief by way of judicial review. Such relief will only be available rarely. 

  • The CCA reflects a pay now argue later philosophy.

  • An Adjudicator’s determination is not binding. The successful party cannot enforce a determination without first entering it as a judgment. 

  • The Court should be slow to interfere with the adjudicative process, instead the parties should be encouraged to arbitrate matters. 

  • The issues at stake are important to the construction industry generally. This reinforces the importance of allowing arbitration to unfold to allow full argument of fact, industry practice and law, to be fully ventilated, without precluding further consideration by the Court on genuine issues of law. 

  • A finding on limitation now could set the frame and pre-empt the Arbitrator’s full consideration of the issue. 

  • However, the Court recognised a party’s entitlement to come to the High Court and have errors of law corrected, especially where errors have a significant impact upon a party, whether it be monetary or otherwise. 

Ultimately Justice Whata found against SPCL in terms of judicial review of the Adjudications. He disagreed with SPCL on the limitation finding and found that the assessment of the limitation argument was correct in the Second Adjudication. He also found not unsurprisingly (for the reasons set out above in the bullet points) that judicial review was not the proper forum for what is a very complex and significant issue to the construction industry as a whole.

Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by TM Bates & Co. or Building Today to anyone who relies on the information in this article.