This was an appeal from an order made on 28 April 2005 by Mr Justice Jackson in the TCC. Mr Jackson upheld the adjudicator’s decision and ordered payment for £12,376,454.54 inclusive of interest and VAT.

Devonport’s principle arguments against enforcement were:

  • The adjudicator had acted outside of his jurisdiction;
  • The adjudicator had breached the rules of natural justice;
  • The adjudicator’s decision in respect of defects were not supported by adequate reasons;
  • The adjudicator had no power to award interest.
During the appeal Devonport developed his main points, arguing that the adjudicator awarded more than was originally claimed which took him outside of his jurisdiction. Further, the adjudicator had ignored arguments advanced by both parties in respect of the basis of the target cost calculation. This decision was on a basis not advanced by either party. He did not provide reasons for rejecting all of the arguments and evaluated defects in the manner that had not been proposed by other parties.

Reference


The Court of Appeal rejected these arguments. They accepted the rationale adopted by Mr Justice Jackson at first instance, including the argument that if Buxton were inconsistent then that decision should not be followed.

Lord Justice Chadwick stated, at paragraphs 86 and 87:

“It is only too easy in a complex case for a party who is dissatisfied with the decision of an adjudicator to comb through the adjudicator’s reasons and identify points upon which to present a challenge under the labels “excessive jurisdiction” or “breach of natural justice”. It must be kept in mind that the majority of adjudicators are not chosen for their expertise as lawyers … The task of the adjudicator is not to act as arbitrator or judge. The time constraints within which he is expected to operate are proof of that. The task of the adjudicator is find and interim solution which meets the needs of the case … The need to have the “right” answer has been subordinated to the need to have an answer quickly. The Scheme was not enacted in order to provide definitive answers to complex questions.

In the overwhelming majority of cases, the proper course for the party who is unsuccessful in an adjudication under the Scheme must be to pay that amount that he has been ordered to pay by the adjudicator. If he does not accept the adjudicator’s decision as correct (whether on the facts or in law), he can take legal or arbitration proceedings in order to establish the true position. To seek to change the adjudicator’s decision on the ground that he has exceeded his jurisdiction or breached the rules of natural justice (save in the plainest cases) it is likely to lead to a substantial waste of time and expense – as we suspect, the costs incurred in the present case will demonstrate only too clearly.”

In respect of interest, Mr Justice Jackson had taken the view that paragraph 20(c) of the Scheme conferred a free-standing power on the adjudicator to award interest. The Court of Appeal did not agree.

Paragraph 20 of the Scheme gave the Adjudicator certain powers, but only in respect of the matters in dispute. In paragraph 91 Lord Justice Chadwick stated:

“So the adjudicator may decide questions as to interest if, but only if, (i) those questions are “matters in dispute” which have been properly referred to him or (ii) those are questions which the parties to the dispute have agreed should be within the scope of the adjudication or (iii) those are questions which the adjudicator considers to be “necessarily connected with the dispute”. Questions which do not fall within one or other of those categories are not within the scope of paragraph 20(c) of the Scheme. There is no freestanding power to award interest”.

During the adjudication Devonport argued that as there was no sum owing to Carillion the question of interest did not arise. The Court of Appeal took the view that this was significant in that Devonport did not dispute that the adjudicator did not have power to award interest. As a result they have not taken issue with the adjudicator’s power to award interest, and so the parties had agreed that the adjudicator had the power to decide whether interest should be paid.

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*Full case details
16 November 2005, Court of Appeal, MR Clarke, LJ Chadwick, LJ Moore-Bick [2005] EWCA Civ 1358,

Postscript

Devonport was refused leave to appeal on a number of the grounds sought. In particular, Lord Justice Chadwick stated that it would be inappropriate for him to express any view as to whether or not the adjudicator was correct (as a matter of law) to adopt the approach he did. Decisions must be enforced, even if they result from error of procedure, fact or law.