Limited scope of the adjudicator - distinction between jurisdictional errors and errors of law

The case McLaughlin & Harvey Ltd v LJJ Ltd [2024] EWHC 1032 (TCC) revolves around the enforcement of an adjudicator's decision in the context of a construction contract dispute.

The court’s decision to enforce the original adjudicator's decision reflects the emphasis on finality and efficiency in adjudication. It serves as a reminder of the limited scope of the adjudicator’s revision powers and underscores the distinction between jurisdictional errors and errors of law. Moreover, it highlights the court's role in ensuring that parties cannot endlessly challenge adjudication decisions, thereby upholding the swift nature of the adjudication process.

Summary of the Case:

McLaughlin & Harvey Ltd (MHL), the claimant, sought summary judgment to enforce an adjudicator's decision from October 31, 2023, which directed LJJ Ltd (LJJ) to pay ￡808,000 within seven days. LJJ opposed this enforcement on several grounds, including that the decision had been superseded by a revised decision made by the adjudicator on November 4, 2023.

The core of the dispute arises from multiple adjudications between MHL and LJJ under their construction contract, with the present case focusing on adjudication number 5. MHL had engaged LJJ for mechanical, electrical, and plumbing works at a London property, and the dispute concerns the Key Date Damages under the sub-contract for failing to meet project milestones.

Critical Issues:

1. Adjudicator’s Decision and Revised Decision:

LJJ’s main argument was that the October decision was invalid because it was superseded by a November decision. The court, however, found that the adjudicator exceeded his powers in making the revisions, as there was no clerical or typographical error, the only grounds under which revisions could be made according to the applicable rules. The judgment thus asserts the principle that adjudicators must remain within the scope of their power under the Housing Grants, Construction, and Regeneration Act.

Analysis: The court’s decision highlights the narrow scope of adjudicator powers in revising decisions. The judgment underscores the importance of finality in adjudication decisions, reinforcing the notion that only limited corrections can be made, preventing parties from prolonging disputes unnecessarily. This is consistent with the policy behind the adjudication process, which aims to provide swift and binding decisions.

2. Jurisdiction and Errors in Law:

LJJ further argued that even if the adjudicator had erred, it was within his jurisdiction, and the court should not interfere. The court rejected this, noting that the adjudicator’s correction was not within his jurisdiction, as it extended beyond a clerical error. This distinction between a jurisdictional error and an error of law is crucial, with the court holding that an erroneous exercise of power does not mean the adjudicator exceeded his jurisdiction.

Analysis: This section of the judgment reiterates established principles from cases such as Lesotho Highlands and O'Donnell Developments. It draws the line between adjudicators making errors within their scope of authority (which courts will not interfere with) and acting outside their powers (which courts can challenge). This distinction is vital for maintaining the balance between autonomy in adjudication and judicial oversight.

3. Approbation and Reprobation:

LJJ also claimed that MHL was "approbating and reprobating" by accepting parts of the adjudicator’s revised decision while enforcing the original decision. The court dismissed this claim, stating that MHL’s actions did not prevent them from enforcing the original decision.

Analysis: The concept of approbation and reprobation prevents a party from adopting inconsistent positions to gain advantage. The court’s dismissal suggests that MHL’s actions were consistent with enforcing their contractual rights without contradiction. This reinforces the idea that minor corrections by parties do not amount to inconsistent behavior if the primary decision remains intact.

4. Policy Considerations:

The judgment reinforces the policy that adjudication decisions are intended to be swift and temporarily binding. The court stresses that parties should resolve further disputes through subsequent adjudications or arbitration, not by attempting to reopen adjudication decisions.

Analysis: This ruling aligns with the goals of the adjudication process, which aims to prevent construction projects from being delayed by protracted litigation. By limiting the grounds for revisiting adjudication decisions, the court ensures that the process remains an efficient means of dispute resolution in the construction industry.