In Hitachi Zosen Inova AG v John Sisk & Son Ltd  EWHC 495 (TCC) Stuart-Smith J decided that even if an earlier adjudication had concluded that a variation was valid and its value was ‘£nil’ for the purposes of a payment application (due to lack of evidence), the decision made in a subsequent adjudication relating to the actual value of that variation would still be enforced.
The claimant had been employed to design, construct, commission and test a multi-fuel power plant. It engaged the defendant to provide design and construction services. Additional work under the contract was called an “event” and a number of adjudications took place concerning the contract. In the second adjudication, the value of various events included in the defendant’s interim payment application was referred to an adjudicator, including event number 1176.
This earlier adjudication had found that the defendant had been instructed to accelerate its works as claimed, which was a variation requiring valuation. However, the adjudicator stated “I do not have sufficient details to value the words and hence for the purposes of Payment Notice 6 my value is £nil”. In the eighth adjudication, the defendant sought to recover monies for event 1176. The adjudicator concluded that the defendant had substantiated a claim for approximately £825,700 for the event and that the claimant should issue a variation to that effect.
The claimant submitted that the adjudicator in the eighth adjudication had no jurisdiction because the same or substantially the same question had already been decided in the second adjudication where event 1176 was valued at nil.
Stuart-Smith J decided that the adjudicator’s original decision made it clear that the adjudicator expressly declined to take a view about the proper value that could be attributed to event 1176 and that “value” of “£nil” was not a valuation, it was merely the consequence of the lack of substantiation before him, and was not intended to decide whether the defendant had incurred cost and expense for which they should be reimbursed. He had expressly left open whether there was any value in the event; that question was to be decided at a later date on a subsequent application.
Because the referred dispute in the eighth adjudication was the valuation of event 1176 which was precisely what the adjudicator declined to decide in the second adjudication, for want of substantiating evidence at that time, the judgment held that the dispute in the eighth adjudication was therefore not the same or substantially the same as the dispute decided in the second adjudication.
The Court of Appeal gave Hitachi Zosen Inova AG leave to appeal but the case has since settled.
Steven Walker QC (instructed by Vinson & Elkins LLP) for the Claimant.
Nicholas Collings (instructed by Eversheds Sutherland (International) LLP) for the Defendant.
To read the full judgment please click here.
8 March 2019