Haskell Construction Ltd v Ashcroft

In this case, Haskell commenced construction for Alpine when complications arose requiring further work to the structural steel framing. This additional work was subject to a variation which added to costs. A payment claim for the variation was disputed and the contract was subsequently cancelled. Adjudications were initiated and Alpine applied for a third adjudication seeking damages for breach of statutory implied terms. The adjudicator decided that he had jurisdiction to hear the third adjudication and Haskell applied for judicial review rejecting this on two grounds:

1. The doctrine of issue estoppel

2. The damages sought fell outside the scope and jurisdiction of an adjudication

Issue Estoppel

According to the doctrine of issue estoppel, an adjudicator has no jurisdiction to hear a case that has already been adjudicated on the same matters. This prevents a party from re-adjudicating an issue to seek a more favourable outcome. The subsequent adjudicator is essentially bound by the decision of the previous adjudicator regarding the same issue. The Court referred to AEP v KM where it was stated that a case-specific form of discretionary assessment is required, which involves balancing the interests of finality against the risk of creating injustice by preventing a substantive determination on the ground that the issue has previously been rejected.[1] The focus should be on what was actually determined in the earlier adjudication decision as that determines how much or how little remains available for consideration by the subsequent adjudicator. The Courts should be cautious in interfering with the adjudicator’s decision as the adjudicator is in the best position to decide the matter. It was held that this doctrine did not apply in this case as the previous adjudications did not consider statutory warranties or remedies which was the claims brought in the current adjudication.

Damages

With regards to the jurisdiction of an adjudicator to award damages, the Court held that an adjudicator should have the jurisdiction to determine whether a person’s rights and obligations under an implied warranty have been breached and if so, to determine the appropriate statutory remedy under the Building Act 2004. It would not be appropriate to place a gloss on the clear words and purpose of the legislation by preventing an adjudicator from making an award of damages under the statutory remedy. The legislation supports the ability of an adjudicator to make rights and obligations determinations for breaches of implied warranties as well as to determine the statutory remedy that applies.

The Court further commented that a determination by an adjudicator about the rights and obligations of the parties under the contract is binding and continues in full effect, even though a party has applied for a judicial review of the determination or any proceedings relating to the dispute between the parties have been commenced.

Decision

Ultimately, the application for judicial review failed on both grounds. The adjudicator has jurisdiction to hear the matter and determine the damages that Alpine is entitled to.

Key Lessons

The key lessons from this case are:

  • Parties must ensure they put forward their full case to the adjudicator as they will be unable to re-adjudicate the same issue. This involves including all evidence and putting forward all relevant legal claims.
  • There is an emphasis of finality in the adjudicator’s decision and the need for parties to accept decisions of adjudicators as they will be unable to get a ‘second attempt’ if they are unhappy with the outcome.
  • Courts are cautious in interfering with an adjudicator’s decision and parties should therefore be cautious in putting forward a case to the Courts that challenges an adjudicator’s decision.
  • Parties may put forward a case of remedies and seek damages or compensation to the adjudicator.

Footnotes:

[1] AEP v KM [2015] NZHC 380 at [12].

Riaia Donald is a Senior Associate in MinterEllisonRuddWatts' Construction team and Irene Kim is a Law Clerk.

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