If you had to decide a dispute involving 51,000 job orders in 28 days, would you need to wear your underpants outside your clothes? Well, the following case put this to the test
You might bet that HS Works was a happy subcontractor when it read the decision of adjudicator number one. That said Enterprise Managed Services, the main contractor, had better hand over the £1.8m it had withheld. But, quick as a flash, Enterprise brought another adjudication, this time to decide what the final account should be. The glint in Enterprise’s eye was that if adjudicator number two agreed with its calculations, it would not have to stump up that money.
Smart. HSW, on the other hand, smarted. Its £1.8m might disappear down the rabbit hole. You might think that all it had to do was to argue for a particular figure for the final account, and all Enterprise had to do was argue for a lower one. Well, er, it’s a bit more fun than that. It’s not for me to put words in HSW’s mouth but it’s plain from the story in the High Court that it believed it was a loony idea in the world to bring the final account to adjudication. Resign, resign, it shouted at the adjudicator.
Let me tell you the story. Enterprise has been working on one of those utilities term contracts that last several years. It’s for the maintenance of Thames Water infrastructure, and the inevitable carriageways repairs are subbed to HSW. That expired last year, so it was time to settle the final account for the subcontract. HSW said it was £31m or so. Enterprise said it was £25m.
Now then, pause to reflect that adjudication is all about sorting out a dispute under one contract in 28 days. Yes, yes, this one is a contract, spread over (wait for it) 51,000 job orders. The yell from HSW was that it was seriously and unfairly disadvantaged if it had to answer Enterprise’s claim in a few days. The only thing was for number two to pack his golf-bag and go play a few rounds instead.
You might think that all HSW had to do was argue for a particular figure for the final account, and all Enterprise had to do was argue for a lower one. Well, er, it’s a bit more fun than that
Enterprise then played a smart card. It offered HSW more time if, repeat if, HSW would pause its High Court action. No, no answered HSW, the process is so unfair that the adjudicator has no option but to resign.
The adjudicator, Mr Don Smith, dealt with all this beautifully. He’s a keen golfer. Image of Clark Gable. I half imagine he’s always ready to use that line from Gone with the Wind: “Frankly, my dear, I don’t give a damn.” Of course he didn’t say that. Adjudicators are models of perfect calm. He simply said, “Shan’t”. So, the scene was set for another gargantuan dispute to be decided in 28 days. Sounds more like Clark Kent than Clark Gable. As for HSW, it made plain that it was going on only under protest … and would go to court if it didn’t agree with the award.
As you might have guessed, it didn’t and it did. There are two interesting points here. One is about how the court deals with enforcing connected adjudications (I’ll tell you about that another time). The second is whether the dispute is too substantial to be considered within the timetable; meaning daft or, as the lawyers put it, “unfair”. So the court, or in this case Mr Justice Akenhead, looked at how the adjudicator reached his decisions. He was also on the lookout as to what dialogue went on beforehand. That’s important. Did the complaining party have before it the other party’s case so as to fairly deal with it? That’s a warning to folk who sit on their hands, and the “one liner” brigade who ask for “better information”.
So, what procedure did the adjudicator adopt? It seems that he weighed up which side was more credible than the other. How? He did spot checks on large dispute items. In other areas he checked all the arguments. As the judge said: “If spot checks reveal that one side’s quantum on a specific head is unjustified, that undermines the credibility of its position on that particular claim. That can legitimately lead to the conclusion that one side’s evidence is to be preferred.”
When the contract expired last year, it was time to settle the final account. HSW said it was £31m. Enterprise said it was £25m
As for the pre-adjudication flow of information, the judge said HSW “clearly had more than enough information to hand to discuss and negotiate on the final account”. Even a surprise expert report by Enterprise was not radically different from what must have been apparent beforehand.
So the adjudicator was right to prefer the case advanced by Enterprise on the final account, after which he went and played golf with Clark Kent.
Tony Bingham is a barrister and arbitrator at 3 Paper Buildings Temple.
Original print headline: 'Playing golf with superman'