Adjudication, introduced as a quick-fix solution, has become blighted by tactical game playing. Perhaps it’s time to shake things up again
In just a while, I will tell you all about the dispute at the posh Hilton Hotel in Park Lane. First though, I have noticed around one High Court case per week in recent weeks having been about the respondent in adjudication cases telling the adjudicator to push off because there is “no jurisdiction”, “no right to adjudicate”.
Adjudicator’s shrug; “here we go again”, we mutter. Perhaps the time has come to re-think these technical tactics. And I can’t resist one of Mr Justice Coulson’s neat asides in one of these recent cases (Penten Group Ltd vs Spartafield Ltd).
He said: “The topics raised at adjudication enforcement hearings seem to change with the seasons. A few years ago, those debates centred on alleged breaches of natural justice. More recently, it was the intricacies of the payment notices/pay less notice regime, which held centre stage. And now the wheel has turned again and the courts are grappling with the consequences of what might be termed serial adjudication. In this case, that is complicated by the fact that the adjudicator had to reach a decision about the contract and its terms, before going on to deal with the underlying financial claims. […] I have seen at least five notices of adjudication, and I am told that there might be as many as nine in total, but so far there has been only one completed adjudication. All this might be thought to be some way from the use of adjudication as a simple and clear dispute resolution process”.
Precisely, Mr Justice Coulson.
So what about this Hilton Hotel job? The case is AMD Environmental Ltd vs Cumberland Construction Company Ltd. The M&E contractor AMD Environmental was awarded £78,000 by the adjudicator. But Cumberland refused to pay. The Technology and Construction Court (TCC) High Court judge came on stage. Cumberland argued one of those “here we go again” arguments: no dispute had arisen (“not crystallised”) by the time of the start of the adjudication. It argued too that the adjudicator “failed in his decision to address important matters in issue”.
The judge would have none of it. He said: “I have observed before that this [crystallised] argument is frequently advanced and almost as frequently rejected by the courts.” Have you got the hint? As for this Cumberland attack, he began: “In the present case I have concluded that, for a number of reasons, the crystallisation argument is hopeless.” So did the adjudicator. There had been eight months of pre-adjudication, detailed toing and froing between the parties about money due. That’s ample evidence of a dispute having ripened; it was, by now, a well-aged cheese. Cumberland had argued to the judge that in the eight months they had repeatedly asked AMD for “particulars” about the account. I remember my old boss telling me that this one-line letter was enough to avoid paying up. He was wrong, and so was Cumberland, said the judge: “When a contractor or a subcontractor makes a claim, it is for the paying party to evaluate the claim promptly, and form a view as to its likely valuation, whatever points may arise as to particularisation. Efforts to acquire further particularisation should proceed in tandem with that valuation process.” Crikey, my old boss will turn in his grave.
Cumberland wasn’t done yet. They told the judge the account issued by AMD was “so nebulous and ill-defined”, that no payer could sensibly respond to it. That didn’t work either. Nor did the novel argument that, when the adjudicator asked for further information about the AMD account, he was being unfair, acting improperly and helping AMD. The judge firmly rejected all that. It was “tantamount to saying that an adjudicator cannot ask for information which he or she believes will be of assistance in reaching their decision”.
He continued: “[It is] contrary to a basic principle of adjudication, which allows the adjudicator a wide leeway to seek information that he or she believes to be important.” And that, “it cannot possibly be right that an adjudicator who does that and a claiming party who responds to the request, is somehow acting in breach of natural justice.”
Then the last point raised was the fashionable notion that the adjudicator can be attacked for failing to address all the matters in issue. It got Cumberland nowhere.
Useful recap though; here are the rules:
- The adjudicator must attempt to answer the questions referred to him, being the separate sub-issues
- If the adjudicator fails to do so, the decision is set aside, but only if the error is deliberate. The decision does not fail if the approach to the scope was a mere inadvertent failure to consider a number of issues
- In any event a failure to consider an issue must have a potentially significant effect on the overall result of the adjudication.
If you detect the TCC judges are a fraction fractious about all these challenges, it may indicate the time has come to find a way of putting things right. We had one reboot five years ago. If we start now on another we might get it done by 2025.
Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple