Tony Bingham explains how a recent case clarifies the scope of adjudication and the adjudicator’s role
Aha – here they come, the jurisdiction challenges. It must be about day three of the latest adjudication, and the responding party is telling the adjudicator (as usual) to shove off – politely, of course. “Go away, because … er, well, let me think …” Aha! Yes: “There is no crystallised dispute”, or “there is more than one dispute”, or a “previous adjudicator decided the dispute”, or “there is a dispute but it’s not a construction dispute”, or, oh dear, “we have been ambushed”, or, or, or … Those of us who have been in the game these (exactly) 20 years of the Construction Act just shrug. We expect it; we are used to it.
In fact, these lists of “clear offs” have got longer and longer. And a recent Scottish case tells us why.
Harndec Flooring supplied and laid the soft vinyl flooring to the classrooms and corridors at Cryston high school, North Lanarkshire. The floor comprised a concrete slab, then insulating board, then anhydrite screed, then a primer to take the latex levelling compound. It went wrong and began bubbling and blistering here, there, then everywhere. The defects bill was a tidy half-a-million pounds. The dispute went to the adjudicator, who decided Harndec was liable: it was down to the wrong primer, wrongly laid, plus damp in the screed. It came to court to oblige Harndec to pay up.
Instead of making argument about jurisdiction to the adjudicator, you can reserve jurisdiction argument until the adjudication is over
Let me deal first with this business of jurisdictional challenges in the opening round of the adjudication. Seemingly, Harndec made detailed challenges. The adjudicator rejected them. It tried again in court at enforcement stage and added some more. But according to the legal textbook known as Keating: “A party will not be allowed to raise an argument during enforcement proceedings that is in substance a jurisdictional challenge when this argument was not made during adjudication.” The judge accepted that. New ones are too late.
Wait a moment; there is a lifeline. The judge distinguished “specific challenges” and a “general reservation of rights to adjudicate”. Instead of making argument about jurisdiction to the adjudicator, you can reserve jurisdiction argument until the adjudication is over. Care is needed on how that reservation is made; it can’t be meaningless. Can you see the attraction? Adjudicators at day three may come at it too quickly. Moreover, the challenger may not have thought of all available challenges. There is real merit in making a general reservation only and leave the adjudicator to get on with deciding the dispute.
The judge in the Harndec case also looked at another five issues:
- Did the adjudicator decide on matters that were outside the scope of the dispute, and hence outwith his jurisdiction? No, he didn’t. The analysis is very helpful. The legal principle is not to go outside the four walls of the “notice of adjudication”. That’s the document that nails down the topics to be decided. Neither the referral nor anything else can extend jurisdiction. But the notice of adjudication does not necessarily determine what the true dispute comprises. It is read against the background contract of all the correspondence. Ask of the notice: what would a reasonable person having background knowledge available to the parties understand it to mean?
- Did the adjudicator deal with two disputes? No. Apparently the claim was brought for the flooring defects to be compensated under the contract, or alternatively as a claim in damages. The adjudicator dismissed the claim in damages and awarded the monies under the defects clause. Aha, said Harndec, the adjudicator decided two disputes but the Construction Act says there is a right to decide “a dispute” – not “one or more disputes”. No, no, said the judge: the adjudicator dismissed the alternative; that’s all.
- Did the adjudicator leave out of the account a relevant consideration or argument? No. Harndec argued that because the adjudicator neither commented on nor analysed a key item of evidence, he had overlooked the evidence and it was critical to arriving at a different result. The judge wouldn’t wear that argument. Adjudication is a speedy method of deciding disputes to give a provisional result. It is not practicable for an adjudicator to “meticulously consider every aspect of the evidence; it is supposed to consider the substance”.
- Was the adjudicator unfair? Leaving out of his award key items pointed to unfairness, said Harndec. “No, it doesn’t,” said the judge.
- Did the adjudicator fail to give sufficient reasons for the result? No, said the judge. “If the adjudicator is requested to give reasons, a brief statement of those reasons will suffice. The reasons should be sufficient to show that the adjudicator has dealt with the issues remitted to him and what his conclusions are on these issues.”
Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple