The "same or substantially the same" dispute: further Court of Appeal guidance
A Court of Appeal decision issued earlier this year (January 2016) has given further consideration to the circumstances in which parties will be prevented from referring the “same or substantially the same” dispute to adjudication. The decision follows a Court of Appeal decision in December 2015 considering the same issue. It provides added support for a narrow approach in assessing similarity with previous adjudication proceedings.
Brown v Complete Building Solutions
The Browns employed Complete Building Solutions (“CBS”) in 2011 to demolish a house in Surrey and build a new one. The form of contract was JCT Minor Works. This incorporated the adjudication provisions of the statutory Scheme for Construction Contracts. The initial contract price was £496,578. The works went ahead and practical completion was certified in April 2013. A certificate of making good defects was issued in October 2013. A final certificate followed. After that, CBS wrote to the Browns claiming a final sum of £115,450. When the Browns did not pay, CBS went to adjudication.
The adjudicator’s decision found the final certificate was ineffective as it had not been issued in accordance with the contract. The adjudicator also found that CBS’s letter (based on that final certificate) was not a valid payment notice. CBS immediately sent a fresh letter asking for the same sum of £115,450, this time with reference to the contract clauses applicable where there is no final certificate. When that was not paid by the Browns, CBS started a second adjudication. The Browns objected. They said this was the “same or substantially the same” dispute as the first adjudication and so the second adjudicator had no jurisdiction. The second adjudicator disagreed and pressed on. The Browns did not serve a pay less notice and did not participate in the second adjudication. The second adjudicator ordered payment to CBS and the Browns refused to pay.
“Same or substantially the same”?
The Browns challenged the second adjudicator’s decision in the Technology and Construction Court and before the Court of Appeal. The Brown’s relied on paragraph 9 of the Scheme, which states that:
“An adjudicator must resign where the dispute is the same or substantially the same as one which has previously been referred to adjudication and a decision has been taken in that adjudication”.
The Browns argued that CBS’s second payment notice was served simply to correct “shortcomings” in the first application, so the substance of the two disputes was the same.