As previously published in Construction News, Spring 2005
I have approached this article from this viewpoint of the adjudicator and the increasing difficulties that he appears to be facing in making his decision. In the past year a number of decisions have been handed down by the courts in which decisions have been stayed or not enforced due to the courts perceiving some lack of procedural fairness or bias by the adjudicator. Certainly on the face of the reported cases, difficulties seem to be arising due to the adjudicator's wish to make a decision despite problems being thrown up by the parties to the adjudication. Thereby the adjudicator falls into a trap by allowing either insufficient time for the parties to deal with the matters arising or by allowing the dispute to morph into some other dispute over which he has no jurisdiction.
A lack of care by the adjudicator may be one issue but, more often than not, the real problem is the relatively short time within which to make his decision and the increasing amount of information and submissions being provided by the parties as the adjudication proceeds. In some cases it pays the responding party to cloud the issues and submit large volumes of irrelevant material in the hope that this will distract the adjudicator so that a decision is made that is not only less onerous to the responding party but also one that can be challenged in any enforcement proceedings should he decide not to comply with it.
As both an adjudicator and a party representative I know to keep a close eye on the submissions being made whilst ensuring that the actual dispute is not being twisted so that a different dispute ends up being decided. Additionally the evidence, provided by either party, should be considered at an early stage so that if either an objection is made as to its admissibility or if further written or oral submissions are required, these can be dealt with in good time rather than in a blind panic. It is always a good idea to fix a tentative date during the adjudication for a meeting should matters of evidence appear to be in conflict; by doing this it is more difficult for either party to say that they are unavailable thereby avoiding a potentially difficult position. Clearly if evidence needs to be tested orally and a meeting cannot be arranged due to conflicting commitments the likelihood is that an extension to the adjudication timetable will be required. If the parties do not agree to such an extension then a decision will need to be made without the evidence having been tested, or only partially tested. This could result in a submission that the adjudicator has not operated the adjudication fairly. If the adjudicator makes his decision it may become unenforceable or, alternatively, the adjudicator may decide that he has no option but to resign.
In the following cases decided over the last year I have highlighted those matters that have caught adjudicators out so that some of the pitfalls involved in decision making can be avoided in the future.
The Dispute
McAlpine PPS Pipeline Systems Joint Venture v Transco plc HHJ TCC (12 May 2004)
This case shows that the Referral needs to include all matters and evidence to be relied upon but also demonstrates that the adjudicator needs to be very careful in allowing and/or requesting additional evidence that may be unnecessary to decide the dispute as referred. Even if the evidence is within the remit of the dispute as referred the adjudicator must be careful to allow new material where the other party is not given a reasonable opportunity to consider and respond. An extension to the adjudication period may be required: if an extension is not allowed by the parties then either the new material must be rejected or, if that in itself is considered to be unfair, then the adjudicator must resign. To continue in the face of apparent unfairness will lead to an unenforceable decision.
AWG Construction Services td v Rockingham Motor Speedway Ltd HHJ TCC (5 April 2004)
Another judgment by HHJ Toulmin QC. Again as with the McAlpine PPS case His Honour found that the adjudicator had exceeded his jurisdiction by deciding an issue that was submitted at a late stage and that this issue was central to his decision in the adjudication. His Honour also found that the adjudicator had breached natural justice in considering new material that Rockingham had not provided to AWG prior to the adjudication.
Clearly the issues here are similar to those of McAlpine PPS and the lessons to be learnt are essentially the same. The adjudicator must consider the effects of him trying to decide what he believes to be the true issue is rather than the issue as presented to him in the notice of adjudication.
Error in Law
William Verry Ltd v Communal Mikvah HHJ QC TCC (11 June 2004)
I commented on this case in the last newsletter but raise it again as it shows that adjudicators need to be very careful in their reading of contract and the law. In summary, the adjudicator failed to apply the law correctly but this was insufficient to refuse enforcement of the decision. To avoid an unfair result the judge did not hand down his judgment for some nine weeks allowing the other responding party to carry out its own adjudication to effectively correct the wrong decision.
The case of William Verry is not likely to be repeated too often and can be viewed in a category all of its own. As far as adjudicators are concerned it would be wise to obtain legal opinion before deciding on the meaning of a previous judgment if in any doubt especially if that decision can have a major impact on the one that he is making. As noted, the decision is likely to be enforceable even where wrong which cannot be good for adjudication in general.
Apparent Bias
A&S Enterprises Ltd v Kema Holdings Ltd HHJ TCC (27 July 2004)
This case concerned a claim by A&S, contractors, against Kema, developers, for payment under a JCT WCD 1998 contract. The exact details of the dispute are not pertinent to this article but rather the way in which the adjudicator dealt with issues arising and the evidence.
This case demonstrates that even when under pressure to make a decision and with time running out the adjudicator be fair to both parties, give ample time for the parties to provide their evidence and, when oral evidence is to be heard and relied upon, that the importance of individual witnesses must be made clear to the parties. In this case the adjudicator rather than feel irritated (as shown within his decision) by the non appearance at the meeting of Mr Overend (a witness for the Respondent) should have requested that time be extended to allow the oral evidence to be given and to make it clear to the parties the reasons why he required such oral evidence. If the request to extend time was not agreed this in itself can be considered by the adjudicator while weighing the evidence or possibly lead to his resignation if he feels that a decision cannot be made without that oral evidence.
AMEC Capitol Projects Ltd v Whitefriars City Estates Ltd (2004) 96 Con LR 164
This case was an appeal from the decision of HHJ Toulmin QC at the TCC on .
The Court of Appeal effectively found that an advice relating to jurisdiction in a case where in fact there was no jurisdiction, and where the adjudicator had no jurisdiction to decide his own jurisdiction, cannot amount to an advice that can effect the parties’ legal rights. If the parties' legal rights cannot be effected then the advice does not require any representations from the parties before the adjudicator makes his decision as his decision on his jurisdiction can have no legal effect. There cannot therefore be a breach of natural justice. Put simply, if the adjudicator has no power to decide his own jurisdiction then the fact that he takes advice on the matter of his jurisdiction cannot be seen to be affecting the parties’ respective cases no matter what the outcome of his consideration on his jurisdiction. This being the case the fact that the adjudicator does not avail the parties of the advice that he has taken cannot be used as an argument that he has breached the rules of natural justice.
This may come as a surprise to many adjudicators and party representatives but does make perfect logical sense. In the real world I would still advise adjudicators to allow the parties to make representations on such advice so that difficulties in the decision being accepted and acted upon can be avoided. This case can also be contrasted with the case of Costain Ltd v Strathclyde Builders Ltd 2004 SLT 102. In that case the adjudicator told both parties that he was to take legal advice on a particular issue but didn’t disclose it before making his decision. Despite the adjudicator saying that he did not rely on the advice given, the court found that this was a breach of natural justice and invalidated his decision.
AMEC also confirms the judgment of HHJ Wilcox in London & Amsterdam Properties Ltd v Waterman hip Ltd TCC . In that case it was found that whilst that the adjudicator had made a decision in respect of a previous adjudication between the parties and in respect of the same contract this was not considered to give rise to bias in the second adjudication.
Without Prejudice
A difficulty often encountered by the decision maker is that of finding "without prejudice" communications within the submissions made to him. It is often believed that such communications will bias the adjudicator and make his decision unenforceable. This is not necessarily the case.
Specialist Ceiling Services Northern Limited v ZVI Construction (UK) Ltd HHJ S P Grenfell TCC (27 February 2004)
This case shows that an adjudicator can have receipt of "without prejudice" communications and continue as long as it is apparent that that the adjudicator applies the correct objective test and that the decision shows no influence of the communication and the offer that it contained. If an adjudicator can show that he that he has been entirely uninfluenced by such material and that he has ignored its contents then the decision is likely to stand.
As with all such cases the facts and indeed the contents of any offer should be considered. In this case the adjudicator wrote to the parties noting that in the normal commercial world he would expect offers to be made on a commercial basis and that he was applying the objective test as to whether he should recuse himself or not. The test is:
"Whether in all the circumstances a fair-minded and informed observer would conclude that theirs was a real possibility, or a real danger, the two being the same. That the tribunal would be biased."
It is perhaps also important in this case to note that the adjudicator did not actually see the offer that had been made or whether that offer was for a payment to one party or the other. As a decision maker it will be a matter of the actual facts and the nature of the material seen that will allow him to conclude whether to continue or not. In all circumstances he must be open and above board with the parties, this will assist in allowing them to accept that he is not going to be affected by the "without prejudice" communication that he had inadvertently been given.
Conclusion
A pattern emerges from these selected cases over the past year. The courts will uphold adjudicator's decisions where they can but should they not like the look of a decision the chances are that matters of natural justice can be used to invalidate that decision. Where this is not the case the courts have the ability to make orders or, as in Verry, postpone handing down a decision to allow a course of action to be taken which may have the effect of righting a perceived wrong.
In all cases an adjudicator and indeed an arbitrator should always consider whether his actions can lead to an allegation of bias. The fact that one of the parties is being awkward or that a witness is seemingly unavailable should not result in the decision maker allowing such difficulties to creep into his decision. One wonders whether the court would have taken a different view of the adjudicator's decision in the case of A&S v Kema had he restrained himself and not made what amounted to an attack on Mr Overend's failure to attend the meeting. He may still have been criticised for not obtaining an extended period for the adjudication and not making more effort to obtain Mr Overend's oral evidence but it may not have reached the level of apparent bias.
Ultimately all parties, their representatives and decision makers want to have a decision that is not only effective but one that shows integrity and fairness. Even if a party does not like the decision made and in reality there will be at least one party that is unhappy, it will be easier to accept if he can see that the process was fair and that he was provided with every opportunity to present his case.
