A misjudgment

If an adjudicator establishes that a construction contract exists, then they can reach a decision that must be enforced, even if it is wrong. But let's have a go at putting something right. Cut to the quick, Bingham. Let's have a go at putting the learned Court of Appeal judges right in the adjudication enforcement case Tally Wiejl (UK) Ltd vs Pegram Shopfitters Ltd.

Lord Justice May was quite wrong to say in that case: "Those who consider and make policy for the building industry, including the government, have taken a general view over the years that a temporary balance should in appropriate circumstances fall in favour of those who claim payment, at the temporary expense if necessary of those who pay." That idea was never talked about, nor was it — nor is it — the idea of adjudication. Not one single adjudicator will favour those who claim payment at the temporary expense if necessary of those who pay … except the oddbod who might be completely misled by what the court uttered in Tally Weijl.

Phew, I've been bursting to say that for weeks. Don't stop. Adjudicators, like arbitrators, like judges, like every tribunal, do not favour payer or payee or anyone. They decide the case according to the facts as quarrelled over and according to the law as quarrelled over. And, if some policy-making twerp thought that they could influence adjudicators to favour payees they've got another thing coming. There is no such policy.

Don't stop. "Pay now, argue later" is all about obeying the adjudicator's decision. In other words, the Construction Act obliges the court to enforce the adjudicator's decision, then come back later for a trial. Pay now, argue later is not the rubric for adjudicators, it is the rubric for obeying what the adjudicator decides.

Phew, now I feel even better.

That bit of a rant is probably motivated by the fact that I don't like what the Court of Appeal did in reversing the first judge's analysis in this Tally Wiejl case. He made perfect sense – to some of us at least. Let me tell you the story, in case you don't remember John Redmonds' exposition last year (19 December, page 45).

The Court of Appeal did not try the ‘which contract’ dispute. The appellant only came to resist enforcement. The Court of Appeal became distracted …

Pegram refurbished Tally Wiejl's clothing shop on Oxford Street, London. They fell out. Pegram called an adjudicator and pleaded its case. It said that standard conditions applied. Tally argued that JCT98 applied instead, and subsequently that no written contract applied at all. Adjudicators are used to that type of argument. Plainly, the first position of both parties was that a written contract existed. True, its content was debatable. But once the fact of a construction contract in writing is admitted, the adjudicator proceeds with the substantive dispute. He did, and ordered Tally to pay £115,000 to Pegram.

In reaching his decision, the adjudicator must cover questions of fact and of law about which terms apply to the dispute. If he gets that analysis wrong, his decision is nevertheless binding until finally decided in litigation or arbitration. Meanwhile, his decision is enforceable. The first judge did enforce. It is plain that if both parties admit to a written construction contract, the adjudication is pukka.

Then along comes the Court of Appeal and wonders which contract the decision was made about. Was it the shopfitter's? Was it JCT98? Was it neither? Then the court said it was wrong to enforce the adjudication until that question was decided by a separate trial. But the need to do that is irrelevant when both parties have already contended that a contract of some sort does exist. The referee was therefore allowed on the pitch; he decides the game. He binds the outcome. If a trial later shows that no contract was in truth converted into writing, then, and only then, is the decision void.

The adjudicator was not there to decide which contract applied. The parties admitted his jurisdiction. No court could stop his decision while it tried out the "which contract dispute". The first judge didn't. The parties only came to argue enforcement. Nor did the Court of Appeal try the "which contract" dispute. The appellant only came to resist enforcement. The Court of Appeal became distracted by that interesting question … and it really does appear to be far from clear which contract applied. And yes, the court must be right to say it was critical to the substance of the adjudication that the contractual wrangle be resolved.