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Skymist Holdings Ltd v Grandlane Developments Ltd
Factual and Procedural Background
This opinion concerns a Part 8 challenge to an adjudicator's decision dated 12 November 2018. The claim was issued on 27 September 2018, prior to the adjudicator's decision. An earlier application to expedite the Part 8 claim was refused by Fraser J on 19 October 2018. The challenge asserts that the adjudicator lacked jurisdiction to decide the dispute.
The dispute involves two companies: the Claimant, Company A, who owns a property known as Beaurepraire Country Estate, and the Defendant, Company B, who was contracted to provide development and project management services at the property. The contract between the parties was agreed to be a "construction contract" under the Scheme for Construction Contracts (England and Wales) Regulations 1998 ("the Scheme").
Company A terminated Company B's services on 27 October 2017. Company B claimed outstanding sums owed at termination and initiated adjudication proceedings. Initially, Company B requested the Chartered Institute of Arbitrators ("CIArb") to nominate an adjudicator pursuant to a clause in a draft agreement ("the DOA") which named CIArb as the nominating body. Company A disputed that the DOA or the relevant clause formed part of the contract, challenging the adjudicator's jurisdiction.
Following jurisdictional objections by Company A, Company B withdrew the first adjudication and issued a new Notice of Adjudication, requesting the Royal Institution of Chartered Surveyors ("RICS") to nominate an adjudicator under the Scheme, as no contractual nominating body was relied upon. Company A did not initially dispute the RICS nomination but sought a senior construction lawyer for the role.
The adjudicator appointed by RICS proceeded with the adjudication despite Company A's jurisdictional objections. Company A then issued the Part 8 claim challenging the adjudicator's jurisdiction. The adjudicator's decision addressed the substantive claims and rejected Company A's jurisdictional objections.
Legal Issues Presented
- Whether the adjudicator was appointed by the correct nominating body in accordance with the Scheme and the contract between the parties.
- Whether the adjudicator's decision was a nullity for want of jurisdiction due to an incorrect appointment.
- Whether the doctrine of approbation and reprobation precludes Company B from challenging the adjudicator's appointment by RICS after previously relying on the DOA clause naming CIArb.
Arguments of the Parties
Appellant's Arguments (Company A)
- The adjudicator was appointed by the wrong nominating body because the contract included a clause requiring appointment by CIArb, not RICS.
- Company B inconsistently relied on the DOA clause to seek adjudication by CIArb and then repudiated it by seeking nomination from RICS, invoking the doctrine of approbation and reprobation to invalidate the adjudicator's jurisdiction.
- The adjudicator's decision is a nullity due to lack of jurisdiction.
Respondent's Arguments (Company B)
- The contract was not contained in the DOA or did not include the clause providing for CIArb as the nominating body.
- The adjudicator was validly appointed by RICS pursuant to the Scheme, paragraph 2(1)(c), as no contractual nominating body applied.
- Company B did not approbate the DOA in a manner that precludes seeking adjudication via RICS.
- The adjudicator's decision did not depend on the DOA being the contract or including the clause.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ecovision v Vinci [2015] EWHC 587 | Adjudicator's jurisdiction depends on correct contractual adjudication provisions and nominating body. | Distinguished; the present case was closer to RMP v Chalcroft but not identical. |
| Pegram v Tally [2003] EWCA Civ 1750 | Jurisdiction challenge can arise if no contract exists; adjudication regime applies only if contract exists. | Supported the principle that absence of contract negates adjudicator jurisdiction. |
| Lead Technical v CMS Medical [2007] EWCA Civ 316 | Wrong appointing body and adjudication rules can invalidate adjudicator's jurisdiction. | Referenced to affirm that jurisdiction depends on correct appointment. |
| Twintec v Volkerfitzpatrick [2014] EWHC 10 | Appointment by wrong nominating body invalidates adjudicator jurisdiction even if another nominating body could have appointed. | Applied to reject appointment where contractual adjudication clause was not part of contract. |
| RMP v Chalcroft [2015] EWHC 3737 | When no contractual adjudication clause exists, appointment under Scheme paragraph 2(1)(c) is correct. | Applied as analogous; the adjudicator’s appointment under RICS was valid. |
| PT Building Services v ROK Build [2008] EWHC 3434 | Doctrine of approbation and reprobation precludes a party from both affirming and challenging adjudicator's jurisdiction. | Applied to assess whether Company B was precluded from challenging adjudicator appointment. |
| Banque des Marchands v Kindersley [1951] 1 Ch. 112 | Benefit must be derived for approbation and reprobation doctrine to apply. | Applied to conclude Company B did not gain benefit from alleged approbation. |
| Pilon v Breyer [2010] EWHC 837 | Approving adjudicator’s decision and then challenging it is impermissible. | Referenced to emphasize the need for clear and unequivocal acts for approbation and reprobation. |
Court's Reasoning and Analysis
The court examined the factual matrix and submissions to determine whether the adjudicator was validly appointed. It found that Company B did not contend that the contract was the DOA in its entirety or that the clause naming CIArb as nominating body applied. The Notice of Adjudication and Referral relied on a contract evidenced by other documents, not the DOA as a whole. The adjudicator’s decision did not find that the contract included the clause requiring CIArb’s appointment.
Accordingly, appointment by RICS pursuant to paragraph 2(1)(c) of the Scheme was proper, conferring jurisdiction on the adjudicator. The court rejected the argument that the adjudicator’s decision was a nullity for want of jurisdiction.
Regarding approbation and reprobation, the court found that Company B did not clearly and unequivocally affirm the DOA clause and then repudiate it. The acts alleged as approbation did not confer any benefit on Company B and thus did not satisfy the doctrine’s requirements. Consequently, Company B was not precluded from seeking adjudication via RICS.
The court further noted that Company A itself had taken inconsistent positions, initially objecting to CIArb's nomination but later challenging the RICS appointment on the basis of the DOA clause. The court emphasized the importance of avoiding overly formalistic jurisdictional challenges that undermine the efficiency of adjudication.
Holding and Implications
DISMISSED
The court dismissed Company A's claim, holding that the adjudicator was validly appointed by RICS pursuant to the Scheme and that the adjudicator's decision was not a nullity for want of jurisdiction. The doctrine of approbation and reprobation did not apply to preclude Company B from seeking adjudication via RICS.
The decision directly affects the parties by affirming the adjudicator's jurisdiction and upholding the adjudicator’s decision. No new legal precedent was established beyond the application of existing principles to the facts of this case.
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