Cases In Point

Mr Justice Dyson indicated that the only prospect for success in attacking an adjudicator's decision was – not surprisingly – that it was outside his jurisdiction. Naturally, this has provided the focus for most of the cases decided since Macob. I will highlight some of the developments to have come out of this case law and indicate where changes to the legislation might be desirable.

A provision in an early draft of the Scheme for Construction Contracts allowed the adjudicator the power to award the winning party's costs against the losing party; this was removed at the insistence of industry representatives. In Cothliff Ltd vs Allen Build, Mr Justice Marshall Evans decided that such power could in any event be implied. This extraordinary suggestion was emphatically rejected by his Honour Judge Bowsher in Northern Developments (Cumbria) Ltd vs J&J Nichol: "If parliament had intended by the act or the statutory scheme to give the power to award costs, it would have said so. There is no implied statutory power granted to the adjudicator to award costs." The difficulty is that Mr Justice Marshall Evans' judgment was given in his capacity as a High Court judge. So, Judge Bowsher's comments are unlikely to represent the law. Allowing adjudicators to have this power is tantamount to killing adjudication. Many potential disputants, especially small businesses, are likely to be discouraged from adjudication if they know that they could be liable for the other side's costs.

Now for the "plant" exemption. In the Scottish case of Homer Burgess Ltd vs Chirex (Annun) Ltd, the court was asked to enforce an adjudicator's decision about payment in respect of works at a pharmaceutical processing plant. The adjudicator had decided that one of the items of work – pipework – was not within the plant exemption in the act. The respondent argued that it was part of the "assembly, installation … of plant and machinery" and therefore excluded. The court agreed. The pipework merely formed the links between the machinery or equipment.

Bearing in mind the objectives of the act, this exemption should be interpreted restrictively, which was not the case in Homer Burgess. There is no reason why plant should be excluded.

The Project Consultancy Group vs The Trustees of the Grey Trust, last July, was the first case on enforcement of an adjudicator's decision in relation to a dispute under a consultant's terms of appointment. It was argued that agreement had been reached before 1 May 1998, and therefore the adjudicator had no power to deal with the matter. The adjudicator decided he had such power.

Why can’t we give the adjudicator a limited power to decide on his own jurisdiction? Surely, he should be able to decide whether or not there was a contract or if there was a dispute

When summary judgment was sought before Mr Justice Dyson, the hearing was – rather strangely – adjourned to enable the defendants to come up with an argument that was not put to the adjudicator; that is, there was no agreement. This new argument won the day for the defendants.

On the other hand, a suggestion that there was no dispute is likely to get short shrift. In Fastrack Contractors Ltd vs Morrison Construction – the first case this year – Morrison said that a notice of adjudication concerning an interim payment application did not disclose a dispute. It argued that the figures in the notice were appreciably higher than the gross sum applied for and, consequently, it had not had the opportunity to dispute these new figures. His Honour Judge Thornton held that Morrison had notice of the essence of the dispute and the amendments were of "detail and degree".

Although the adjudicator does not have the power to decide his own jurisdiction, he – pragmatically – has to consider jurisdictional issues before he can continue with the adjudication. Although all the cases generally conclude that his decision will not be impeached if he has got the law or the facts wrong (or simply made an error), it will not be upheld if he is in excess of his jurisdiction.

This is absolutely right but the whole subject of jurisdictional challenges must be addressed in any review of this legislation. Why can't we provide the adjudicator with a limited power to decide on his own jurisdiction? Surely, he should be able to decide whether or not there was a contract or whether or not there was a dispute? Finally, we come to the case of Grovedeck Ltd vs Capital Demolition Ltd.* The issue was whether the adjudicator had exceeded his jurisdiction by deciding that an oral contract qualified as a written contract. Under section 107, an oral contract can be considered a written one where, in written submissions in adjudication, arbitral or legal proceedings, it is not denied that there was "an agreement otherwise than in writing".