Time and again adjudications end in failure because the courts detect bias. Here’s another case where a botched job inevitably results in a load of wasted money
Impaled on the prong of bias. That’s what did for the adjudicator in the case of A&S Enterprises Limited vs Kema Holdings Limited. I am much obliged to Blake Newport, the project management consultancy, for bringing the High Court judgment to my attention. I will tell you the story in a minute.
Look, don’t you go giving me any tommy rot about adjudication being a rough and ready process; it damn well isn’t, and this case shows it. And, if it was once rough and ready, it ain’t now. Show me the adjudicator who is not 100% impartial, independent, free from bias and I will show you a waste of time and money. Show me the adjudicator who is 1% unfair and I will show you a waste of time and money. Show me the adjudicator who goes off on a frolic of his own, thinking and deciding issues of his own, and I will once again show you a waste of time and money. These are three of the prongs on which an adjudicator can be impaled: bias, unfairness and not keeping to jurisdiction.
In A&S Enterprises, the builder was A&S and the employer was Kema. The contract was a JCT With Contractor’s Design. Pause, please. Why, oh why are there so many disputes under this form? But I digress. The row between builder and employer was all about the role of a Mr Austin. He is an architect. Apparently, he issued five certificates for payment and all were paid. But the sixth took the amount over the contract price. Kema wouldn’t pay. In any case, said Kema, JCT WCD doesn’t have such a thing as architect’s certificates. And so the row unfolded. The builder called for an adjudicator. He was an architect too.
The adjudicator received the referral and response and decided he needed to know a bit more about Mr Austin’s role. He asked for a meeting and asked in particular that Mr Austin attend. Sounds fair enough. The respondent was a tad worried about the expense of a meeting and in any case was struggling to get its people to Derby for the set date. So it told the adjudicator that a key person of theirs, a Mr Overend, was not available. Nevertheless it would, under protest, join the meeting by way of a conference telephone system.
Come the day, the adjudicator sat with the builder while the employer’s folk used telephones. Snag was, the adjudicator became miffed by the non-participation of Mr Overend. His miffedness showed up when he eventually wrote his decision, in which the employer lost hands down. By the time of the conference call it seems it was important to the adjudicator not only to talk to Mr Austin but also to hear from Mr Overend – but he didn’t make the second “need” clear.
When the decision landed it contained the following comment: “Mr Overend chose not to make himself available by telephone and therefore played no part in the meeting. No proper explanation was offered as to why.
Now then, whether this is bias or unfairness or whatever you want to call it, this adjudication has gone off the rails. The court smelled a rat ...
Mr Overend played a crucial role in the events leading to the dispute. His failure to take part in the meeting was very unhelpful, and I view the responding party’s submissions in this light.”
Kema couldn’t really see why it lost. And, if Mr Overend was crucial to the adjudication, why didn’t the adjudicator say so? On top of that, the adjudicator says he viewed Kema’s position in the “light” that their man “chose” not to take part.
Now then, whether through bias or unfairness or whatever you want to call it, this adjudication has gone off the rails. And, if it is really a rough and ready process, the High Court would say: well, what do you expect? No chance. The court smelled a rat and declared the decision void.
Bias is shown when a fair-minded observer would conclude that the circumstances showed a real possibility that the adjudicator might favour one party or the other. So it is an objective test. A test that court decided the adjudicator failed.
It’s all very well to set the adjudicator’s decision aside. Right too, I dare say; but what about all the costs? The parties’ costs are down the pan. The adjudicator’s fees are down the pan. He is protected from liability by a wide immunity clause. But the “biased” adjudicator hasn’t earned his fee. True, he decided something, but he didn’t conduct an adjudication. Does he get to keep his fee? Does the three-pronged botch-up puncture the adjudicator’s contract? Better not to become impaled at all, methinks.
Tony Bingham is a barrister and arbitrator