Here at Mills & Reeve we await the Supreme Court’s decision in Aspect Contracts v Higgins Construction
with baited breath. That decision, following a hearing on 14 and 15 April 2015, will clarify the Court of Appeal’s confusing and contradictory decisions (in Aspect
and Walker Construction v Quayside Homes
) regarding how long a paying party has to challenge an adjudicator’s decision. In the meantime, we have considered some of the more recent case law dealing with enforcement issues, and how parties can avoid pitfalls and use the process to their advantage.
The adjudication process offers many advantages to parties involved in construction disputes, allowing decisions to be reached quickly and cost effectively, in private and usually with far less disruption to the parties than litigation. One of the principal downsides of adjudication, however, is the risk that even when an advantageous order has been made by the adjudicator, that decision may not be “final”. Although the court is expected to adopt a robust approach to upholding adjudicators' decisions, there have been numerous examples over the years where it has refused to enforce them. Some recent decisions have identified areas where care should be taken at various stages of the process.
Before the appointment
In the case of Paice v Harding (March 2015), a dispute arose between a property developer and a building contractor. The developer referred the dispute to adjudication and an order was made in its favour. The contractor challenged the adjudicator’s decision on the basis that the adjudicator had failed to disclose that the developer’s solicitor had called the adjudicator’s office two months earlier to discuss the dispute. It was submitted that this gave rise to a possibility of bias. The court concluded that the call should have been disclosed and that a fair-minded observer would consider that there was bias.
The message? Adjudicators must take care to disclose any potentially relevant information and referring solicitors should ensure that their conduct pre-adjudication could not undermine the adjudicator’s appointment.
During the appointment
Eurocom Ltd v Siemens (February 2015) deals with the appointment process itself. Having been on the wrong end of an order in an initial adjudication, Eurocom referred a further dispute to adjudication. In the referral form to RICS, Eurocom’s representative listed a number of parties (the previous adjudicator and various parties from Siemens’ solicitors) as being conflicted from acting as adjudicator. An adjudicator was appointed and Siemens was ordered to pay Eurocom £1.6 million.
Siemens argued that the adjudicator’s appointment was invalid because of the erroneous information provided by Eurocom regarding potentially conflicted parties. Eurocom did not genuinely believe a conflict existed with all of the individuals named, it just wanted to influence the choice of adjudicator. The court agreed and said that there was a “strong prima facie” case that Eurocom’s representative had made a fraudulent misrepresentation. The adjudicator’s appointment was invalidated and as a result his decision lacked jurisdiction.
The message? Referring parties must take care before naming a party as being conflicted or risk opening up another ground for jurisdictional challenge. Responding parties, on the other hand, should always ask to see the nomination form, as there may be fruitful arguments that can be run.
During the adjudication
In the case of Broughton Brickwork Ltd v F Parkinson Ltd (October 2014) the adjudicator’s decision went against the responding party, largely due to its failure to bring a key document to the attention of the adjudicator. The adjudicator had concluded that the responding party’s pay-less notice had been ineffective due to late service, however an email had been sent in time. Had the adjudicator been aware of that email it is likely that he would have reached a different decision. Nevertheless, the court was not willing to reverse the adjudicator’s order, even though the decision was clearly based on an incorrect finding of fact. The responding party was responsible for failing to bring the email to the adjudicator’s attention and while unfair on the face of it, the decision is reflective of the “rough and ready” nature of the adjudication process.
The message? The decision demonstrates the court’s reluctance to interfere with adjudicators’ decisions and care must therefore be taken to ensure that all relevant information is brought to the adjudicator’s attention.
There are various procedural pitfalls when involved in adjudication some of which are identified in these recent cases. These recent cases highlight the need to tread carefully to avoid falling foul of those pitfalls, but also that there are opportunities available to responding parties to challenge decisions, even when it appears that things have gone against them. Perhaps most importantly, the decisions underline the benefit of having skilled and experienced representation when adjudicating disputes.