Innocence and experience

There are some things in life a man should not look at. That he should avert his eyes from. Lot's wife looked. Tarried and looked. The adjudicator in a recent debacle between subcontractor and contractor tarried too, and looked. Looked at the fresh bundle of papers on his desk. And, because he looked, he was condemned by the responding party, contractor ZVI Construction.

Yet he was doing what any good adjudicator should do: he read the papers as soon as they arrived; learned about the dispute and asked himself: Was this his meat and veg? Could he cope? But his eye landed on a letter that ought not to have been in the bundle. The referring party, a ceilings subcontractor, had received from ZVI a "without prejudice" offer to settle. The solicitor's letter said: "We make this offer in a spirit of compromise for the final account and it does not constitute an admission or concession of the items remaining in dispute."

The subcontractor had been at odds with ZVI over a payment matter. It was an ordinary tiff but they couldn't compromise, so they called in an adjudicator.

Michael Conway was appointed, he is a "good lad" in the adjudication stable. And a grown-up, too. So, after he had seen the misdirected solicitor's letter, rather than simply step down from his adjudication job, he paused, invited argument and weighed up his position.

But ZVI was concerned about the effect on a man's mind when his eye has taken in such information as a willingness to pay. (The amount didn't matter; the point was the subcontractor had let the cat out of the bag.)

Conway reassured the contractor that he was an old hand in the construction negotiating business. "It is well established that parties to a construction dispute often discuss matters on a without-prejudice basis," he said. "Well established, too, that a party may agree to make a payment on commercial grounds to rid itself of a dispute. I don't believe my knowledge of a without-prejudice offer from the building contractor to the subcontractor to settle the whole account will affect my impartiality."

Humph, said the builder, course it will. But it reluctantly continued down the adjudication route. But it eventually lost and was ordered to stump up cash to the subcontractor, it said no.

So it was that the case of Specialist Ceiling Contractors vs ZVI Construction went to court in Leeds a few weeks ago. The issue was whether by merely knowing of the offer to settle, the adjudicator was, in law, biased? If so, his decision was of no effect; the adjudication was a waste of time.

The judge made a useful incidental remark. It would have been very easy and convenient for the adjudicator to have disqualified himself by facing up to the consequences of seeing the letter. If a new adjudicator had stepped into the first bloke's shoes, only minimal costs would have been lost; the only victim would have been the first adjudicator. But now, the judge had to decide whether the adjudicator was biased.

But ZVI was concerned about the effect on a man’s mind when his eye has taken in such information as a willingness to pay

He applied the same tests to the adjudicator as would be applied to somebody inquiring into judicial propriety. First, had the adjudicator said or done anything showing actual bias? No. On the contrary, he had reassured the party that offers to settle were ordinary.

The second test was stiffer. Given the facts, was there a "legitimate fear" that the adjudicator might not now be impartial? An important issue loomed large: public confidence in the administration of justice. Would a fair-minded and informed observer conclude that there was a real possibility – or a real danger – that the tribunal was biased? It sounds like a very tough test, involving the mere possibility that the adjudicator might favour or disfavour a party.

The real worry was the unconscious effect the circumstances may have.

ZVI's barrister said there was the appearance of unfairness, a danger of the adjudicator taking a sceptical view of the counterclaim. The ceiling contractor's barrister accepted that it was wrong to include the letter, but the adjudicator had brought the danger to the front of his mind and dismissed it.