Chloë McCulloch Okay, we all seem to be here (Dominic has logged on as "Hi everyone", so don't let that confuse you). We'll be discussing adjudication. Dominic, in a recent article for Building ("Cats, pigeons, pigeons, cat", 13 February, page 47) you drew attention to adjudication decisions that are not enforced by the courts because the adjudicator was thought to have acted unfairly. You highlighted the controversial decision of Judge Wilcox not to enforce an adjudicator's decision. Can you explain why this ruling is so important?
HI everyone I have no problem with the decision as such. It seems that the claimant in London vs Waterman embarked on a clear path of evidential ambush of the defendant and got its comeuppance. What concerns me is that the judge declared that adjudication was not appropriate for complex disputes. But the legislation confers the right to adjudication in respect of any dispute that arises under the contract.
The judge suggests that where the courts are asked to enforce adjudicators' decisions in complex cases the right course is to throw the application out on natural justice grounds. The rationale for that appears to be not what the adjudicator has done or not done, but simply the nature of the case. I am concerned that we will now see endless attempts to frustrate the process based on this decision.
Nick Henchie I don't agree that that is what the judge said at all – if he had said that he would have just chucked out that particular case because the nature of it was professional negligence, which he did not think was suited to adjudication). Instead he found that there had been an evidential ambush and simply followed the Nuttall vs Carter decision – and quite rightly so. He suggested that parliament needs to look again at this precisely because he did not have power to refuse enforcement solely on the inappropriate nature of the process for a particular type of dispute.
HI everyone I agree that the basic reason the judge rejected the application for enforcement was evidential ambush. But in his judgment Wilcox talks about the risk of a claimant having a pyrrhic victory if the courts subsequently refuse enforcement on the basis that the case was inappropriate for adjudication in the first place. We are already seeing respondents' advisers trotting this case out as some authority for the proposition that complex cases should not be adjudicated and the adjudicator should refuse to deal with them.
Chloë So, do you think this means adjudication is not appropriate for resolving complex disputes?
Chris Hill The judge suggested, in passing, that parliament should review the legislation. If it did, I pity the parliamentary draftsmen given the job of defining "complex" and/or "an allegation of professional negligence". If such matters were to be excluded from the statutory right to adjudication, whole new vistas, even continents, of space for jurisdictional challenges would be opened up. I doubt the construction industry really wants that.
I'd add that the case highlighted one of the adjudicator's worst dilemmas. The adjudicator is obliged to consider all relevant information placed before him and to invite submissions on that information from the parties. Faced with the service of late evidence from one of the parties the judge in London vs Waterman suggests the adjudicator should simply have excluded the evidence. That would have been a brave thing for the adjudicator to have done and might have invited a challenge from the claimant.
HI everyone I understand that the case is possibly heading for the Court of Appeal and – unlike Nuttall vs Carter – let's hope that the court gets an opportunity to address these questions. How do people think it might approach this case?
Nick Well, I question whether these people arguing the case have actually read Wilcox's judgment. I also question quite what is being appealed. I don't think anyone would suggest that Wilcox has not got it spot on by refusing to enforce where there has been an evidential ambush as there was in this case.
When will lawyers and claims consultants understand that all they have to do is set out the arguments and evidence fully in advance of the adjudication and they should be safe from a jurisdictional challenge of that nature? If the Court of Appeal allowed the appeal they would be putting the whole adjudication process in jeopardy. One has to question the motives of a claimant keeping evidence up its sleeve.
Chris I would expect the Court of Appeal to uphold the decision in London vs Waterman. It appears that Macob vs Morrison, the first case on the application of the rules of natural justice, was in fact the high water mark of the view that adjudication is rough justice to which natural justice does not fully apply. Since then it has become more and more clear that the rules apply in full force, possibly tempered only by the demands of the time constraints, although I am not sure what that means. Plainly, evidential ambush has to be dealt with by a "firm grasp" of the rules of natural justice.
HI everyone But should it be possible to adjudicate where you have a complex issue? For instance, an issue relating to professional negligence?
Nick I believe that quality adjudicators are able to and do deal with complex issues adequately in adjudication. Usually this is done by indicating to the claimant that the time for making the decision must be extended and then by setting a sensible procedure that allows for a proper testing of the evidence. If the 28-day rule is rigidly stuck to then we all know that there are many complex construction disputes simply incapable of being determined.
Chris Parties have recently begun to show more flexibility in agreeing to extend time in order to allow adjudicators to deal with complex issues. The lesson of the London vs Waterman case, for claimants, is that if they refuse to allow respondents time to deal with a complex case they risk either having parts of their case excluded from the evidence by the adjudicator or losing an application for enforcement in the courts. In that sense the decision has increased adjudicators' authority.
Adjudication became a statutory right because everyone was fed up with the sloth and cost of arbitration and litigation. It is a condition known to doctors as litigation fatigue
HI everyone I am not sure that I agree with Nick. I think just about any dispute can be determined within 28 days, although more time might obviously be preferable. The point is surely how it is determined and clearly this is what the natural justice decisions are all about. Mr Justice Dyson recognised in Macob vs Morrison that the nature of the process was such that a degree of unfairness is almost inevitable with adjudication but nevertheless that was what parliament intended. Isn't it possible that the Court of Appeal might go back to those roots which were after all central to their finding in the Levolux vs Ferson decision last year?
Nick Well, I question how an adjudicator can possibly decide in 28 days (in fact 21 days following the response) a clause 12 unforeseen ground condition claim, for more than £40m involving a 50 week extension of time claim with more than 20 witnesses and six expert reports? Listed to take 12 weeks in arbitration, I might add.
Chris I agree with Dominic that complexity is not actually a complete barrier to a decision. I think judges have been influenced by the evidence of surveys that suggest that parties to adjudication who are dissatisfied with the adjudicator's decision are disinclined to take their case on to litigation or arbitration. They have interpreted that to mean that the courts should take more care in their role as supervisors of the adjudication process and particularly to enforce the rules of natural justice. In fact, I think adjudication is working well in bringing the parties swiftly towards a resolution, even if the adjudication decision is not of the highest judicial quality.
HI everyone Chris' point about increasing adjudicator's authority is an interesting one and I suppose in a way it might. But conversely, we may see more challenges to the adjudicator based on London vs Waterman considerations, which are broadly the same sort of points that we used to see about adjudication contravening human rights in bad old days before Austin vs Buckland.
Chris I agree that there will be more challenges based on London vs Waterman and I expect shortly to see one going the other way. That is to say a challenge to a decision where the adjudicator has excluded evidence served in ambush.
Chloë Dominic, any thoughts on Chris' point about the supervisory role of the courts?
HI everyone I am with Chris entirely on that. London vs Waterman is, in my eyes, just part of that process of increasing judicial intervention based upon the courts' discovery that adjudication is not simply the first staging post for a construction dispute – in Judge Lloyd's words in Balfour Beatty vs Lambeth. But the implication is that the main part the industry seems satisfied with not taking disputes beyond adjudication and perhaps we should focus on why that is the case.
Chris I will have to invite Dominic for a drink – we seem to agree on everything. The judge in London vs Waterman may not have remembered why adjudication became a statutory right, namely because everyone was fed up with the sloth and cost of arbitration and litigation. Perhaps that is also why dissatisfied parties tend not to take their sense of grievance on to the next stage. It is a condition known to doctors as litigation fatigue.
Nick I guess I'm not invited for the drink then. I am afraid if Dominic is correct that these arguments are already being advanced then Chris must be right – adjudicators will require guidance on this – my view is that they should refuse to consider it unless the referring party allows the responding party sufficient time to consider and comment on it. You can't say fairer than that, can you?
Chris Sorry Nick, of course you are invited, but you are paying for the first round.
Chloë So, any other points to make before we wrap things up?
HI everyone Going back to the judge's words about parliament having a look at the operation of the legislation, what is interesting is that there was a review for government about 18 months ago and none of this complex case stuff was raised as far as I know. Furthermore, while the government's top priority is banning hunting with dogs, is it likely that they will find time soon for the needs of the construction industry?
Chris Quite. Parliamentary review is unlikely in the foreseeable future. In the meantime we have a process in which adjudicators have to strike a difficult balance between considering all relevant information, as they are required to do by the scheme, and excluding evidence served in ambush by holding a firm grasp of the rules of natural justice. A difficult call.
HI everyone Let's go down the pub.