Double indemnity

There is a well established line of legal authority to the effect that a party should not normally make the same claim against another party in two or more different legal proceedings.

To allow the party to do this would be oppressive and unjust to the other party. It would give rise to the risk of inconsistent findings by different tribunals on the same issue or issues. This principle is most typically applied in relation to concurrent proceedings in different courts. It is also applied however, in relation to concurrent court and arbitration proceedings.

In the 1912 case of Doleman & Sons v Ossett Corporation, litigation had been started on a contract which contained an arbitration clause. While these legal proceedings were continuing, and without the consent of the Plaintiff, an arbitrator made an award on the very subject matter of the action. It was held by majority in the Court of Appeal that the court was seized of the dispute and that it was by its decision alone that the rights of the parties were to be settled. It was said that there could not be two tribunals each with jurisdiction to insist on deciding the rights of the parties and to compel them to accept its decision. If the matter were otherwise there would be a race between the court and the other tribunal as to which should be the first to give its decision. This would be "ousting the jurisdiction of the court in a most ignominious way".

The case of Herschel Engineering Ltd v Breen Property Ltd examined whether the same principles would apply to a construction adjudication commenced concurrently with legal proceedings.

Herschel was engaged by Breen to provide electrical and other works at a property in Cornwall Gardens, London. It was not in dispute that the contract between the parties was a 'construction contract' within the meaning of section 104 (1) of the Housing Grants, Construction and Regeneration Act. The contract did not comply with the requirements of the Act in respect of adjudication and accordingly the provisions of the Scheme for Construction Contracts applied.

A dispute arose concerning the non-payment of two invoices submitted by Herschel, who commenced proceedings in the County Court seeking judgment for the amount of the two invoices. While these proceedings were continuing the question of a possible reference of the disputes to adjudication was raised by Herschel before the District Judge. The court made an order including a stay of the proceedings for 28 days "for adjudication to be considered".

Meanwhile, Herschel had given notice of its intention to refer to adjudication the disputes arising from the non-payment of the two invoices that were the subject of the County Court proceedings. Breen characterised such action as an abuse that would entitle it to apply for an injunction restraining the adjudication.

Nevertheless, an adjudicator was appointed. Breen did not participate in the adjudication despite being invited by the adjudicator to do so. In the event, the adjudicator decided the issues, quite appropriately, solely on the basis of the material that had been supplied by Herschel.

Faced with a refusal to pay, Herschel then issued an application for summary judgement in respect of the sums ordered to be paid by the adjudicator. Breen defended, arguing it was being vexed, harassed and put to unnecessary expense by the process of two actions in respect of the same subject matter. Since the County Court proceedings were started before the adjudication, Breen argued the court should have granted an injunction to restrain Herschel from proceeding with the adjudication. In such circumstances the court should not now allow enforcement of the decision.

Breen further argued that by starting proceedings in the County Court, Herschel had effectively waived or repudiated the benefit of the adjudicator provisions contained in the contract.

Mr Justice Dyson accepted that the court would not normally countenance concurrent proceedings in litigation or arbitration. He could not accept, however, Breen's submission that there was a close analogy between the position of an arbitrator and that of an adjudicator. The decision of the adjudicator is not final by paragraph 23 (2) of the Scheme.

Moreover, the Act expressly states that a party may refer a dispute to an adjudicator "at any time". Justice Dyson considered that if Parliament had intended that a party should not be able to refer a dispute to adjudication once litigation or arbitration proceedings had been commenced, he would have expected this to be expressly stated. As for the risk of inconsistent findings of fact, on any view this is inherent in the adjudication process.

In conclusion, there was no reason why for several months Herschel should be kept out of the money that the adjudicator decided it should receive. This would be contrary to the plain intent of the 1996 Act. Accordingly Herschel was entitled to obtain summary judgment in respect of the adjudicator's decision.

One footnote is relevant. Justice Dyson noted there was no evidence that if Breen were successful in defending the County Court proceedings, Herschel would be unable to repay the sum awarded by the adjudicator. Had the position been otherwise, and there was a real doubt as to Herschel's ability to repay if it lost in the County Court, he would probably have granted a stay of execution pending the final determination of the County Court proceedings.