The job in Bedford had gone pear-shaped. Chiltern blamed the architect, the architect blamed Chiltern. It didn't do the strained relationship any good when the adjudicator, Yiannis Pareas, arrived. Chiltern's representative, a Mr Savar, was hostile to the whole notion of a referee. And, it seems, it didn't take long for the referee to take less than a shine to Savar. Chiltern's man was, according to Pareas, abusive, confrontational, inexperienced, lacking in organisational skills and made long speeches that were often irrelevant.
Anyway, the adjudicator ultimately made his decision and ordered Chiltern to pay the architect's fees. Chiltern now attacked the adjudicator. It said he prevented it from presenting its case; took evidence from the architect and didn't report it to Chiltern; took evidence from two subcontractors and didn't report that either; took legal advice and didn't report it; helped the architect to enforce his – the adjudicator's – award; and that this was partisan.
I will tell you what happened in the face of all that in a moment. But first, let me tell you about the adjudication decision itself. I reckon Pareas made the same mistake as umpteen other adjudicators. He misunderstood the principles of the withholding notice (I call it the "amber" notice). He decided that because Chiltern hadn't sent a withholding notice, it lost the chance to hold on to the architect's money.
But the principal complaint against the architect was that it hadn't earned its fees and/or that the alleged breach of contract meant that fees otherwise due were abated. That sort of defence does not ordinarily need a withholding notice. It is not caught by section 111 of the Construction Act. The adjudicator didn't seem to understand this. Nor do lots of others.
If you must write, resist the opportunity to expand on reasons and certainly do not argue the case for one of the parties
Such a wrong decision is nevertheless binding. But Chiltern had another line of attack: to claim that the adjudicator's procedure was out of order. Bias or gross unfairness might persuade the High Court to refuse to enforce the adjudicator's decision. And that's what happened here – the winning party tried to enforce Pareas' award, but the High Court wasn't keen. The reason was that the adjudicator had broken the scheme's rules.
"New" adjudication is an inquisitorial or investigative process. The 28-day process requires the adjudicator to phone, meet and inquire with all sorts of people to get to the facts and get to the law. No one can whinge if the adjudicator speaks one-to-one with the parties or anyone else. But the golden rule is to give the parties a chance to comment on whatever information is dragged up. If a relevant bit of evidence comes your way, adjudicator, or you take legal advice, jolly well tell the parties what was said. Indeed, under the scheme it is your duty to do so.
Apparently, the judge thought that the adjudicator had not done this. On top of that, the adjudicator was asked by the architect to produce a witness statement for the enforcement. He did. Here he explained what had gone on and what impression he had taken of Chiltern. The judge thought that Pareas had formed "adverse views" of Chiltern early on in the proceedings and failed to inform Chiltern of the additional information he had obtained. That was a breach of the scheme, and the witness statement suggested he had not remained neutral.
As for an adjudicator producing a witness statement, there is no rule against it, but to do so at the behest of one party may destroy the other's confidence as to impartiality. It is easy to understand the temptation for an adjudicator: if your integrity is attacked, or you see a wrong remark, your hackles will rise and so will your pen. But if you must write, write a factual account only. Resist the opportunity to expand on the reasons and certainly do not argue the case for one of the parties.
Woods Hardwick Ltd vs Chiltern Air Conditioning Ltd [Case No 45 in our series]. Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or e-mail him on email@example.com.