Building contract – Adjudicator — Jurisdiction — Parties entering into building contract containing adjudication clause providing for referral to adjudicator within two days of appointment — Respondent failing to serve referral within time limit — Appellant claiming to have accepted respondent’s repudiatory breach of adjudication — Adjudicator finding against appellant – Whether adjudicator having jurisdiction — Whether party entitled to refer dispute to adjudication on one occasion only – Whether apparent bias nullifying adjudicator’s decision a nullity — Appellant’s appeal dismissed – Respondent’s appeal allowed in part
The respondent company was engaged to carry out refurbishment works at a train maintenance depot and employed the appellant company as a subcontractor. The subcontract incorporated the CECA form of subcontract (6th ed) containing the February 2006 amendment. Under clause 18B(1)(a), each party was entitled to refer any dispute to adjudication under the Institution of Civil Engineers (ICE) adjudication procedure (1997) (CEAP), para 4.1 of which provided that the referring party had to serve its statement of case within two days of the adjudicator’s appointment.
The subcontract was a construction contract for the purposes of section 108 of the Housing Grants, Construction and Regeneration Act 1996, which provided that a party had the right to refer a dispute arising under the contract for adjudication. Section 108(5) provided that, where a contract did not comply with the requirements of the previous subsections, the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649) applied.
Disputes arose between the parties and their contractual relationship was terminated. The appellant issued proceedings against the respondent in respect of the outstanding value of its work and for damages for wrongful termination. Those proceedings were stayed to arbitration by agreement and an arbitrator was appointed. While the arbitration was on foot, the respondent served an adjudication notice on the appellant and an adjudicator was appointed by ICE. The respondent failed to take the necessary steps in the adjudication alleging that the first adjudicator appeared to be biased. The respondent, mistakenly believing that the first adjudicator was disqualified on grounds of bias, served a fresh adjudication notice and a second adjudicator was appointed.
The appellant argued that the second adjudicator did not have jurisdiction since the first adjudicator had not been disqualified and brought a CPR, Part 8 claim seeking an injunction to restrain the second adjudicator from proceeding. Akenhead J rejected the appellant’s claim holding that a statutory entitlement to adjudicate underlay the contractual provisions for adjudication: [2011] EWHC 1035 (TCC); [2011] PLSCS 133. The appellant then brought a further action claiming that the second adjudicator’s appointment and his subsequent decision in favour of the respondent were invalid. The respondent issued proceedings to enforce the adjudicator’s award.
Judge Waksman held that that the respondent had been entitled to start the second adjudication, despite allowing the first adjudication to lapse. However the second adjudicator appeared to have made up his mind before he had received or considered the appellant’s submissions and refused to enforce the award: [2011] EWHC 1679 (TCC).
The appellant appealed against the decision that the second adjudicator had jurisdiction. The respondent appealed against the finding of apparent bias.
Held: The appellant’s appeal was dismissed. The respondent’s appeal was allowed in part.
(1) There was nothing in section 108 of the 1996 Act, clause 18B of the sub-contract or the 1998 Regulations which permitted a party to refer a dispute to adjudication on one occasion only; nor was there any authority to suggest that a claimant would lose his right to adjudicate a dispute for all time if he failed to pursue an adjudication further after the preliminary steps had been taken. The subcontract between the parties, the ICE adjudication procedure and the 1998 Regulations recognised a right to restart an adjudication in a variety of circumstances. It was possible to think of many situations, not all of which were provided for by express terms, in which the adjudication procedure would be thwarted if there were no right to re-start an abortive adjudication. It could not be right that the respondent’s entitlement to adjudicate the dispute in question had been irretrievably lost. Since the respondent’s conduct was permissible under the subcontract, the second adjudicator had jurisdiction: Connex South Eastern Ltd v MJ Building Services Group plc [2005] 1 WLR 3323; Midland Expressway Ltd v Carillion Construction Ltd (No. 3) [2006] BLR 325; and Hart Investments Limited v Fidler [2007] BLR 30 considered.
(2) The test for apparent bias was whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. In the context of adjudication that test was applied where apparent bias or apparent pre-determination was alleged against an adjudicator: Porter v McGill [2002] 2 AC 357 and Amec Capital Projects Ltd v White Friars City Estates Ltd [2005] 1 All ER 723 applied.
There was nothing objectionable in a judge setting out his or her provisional view at an early stage of proceedings, so that the parties had an opportunity to correct any errors in the judge’s thinking or to concentrate on matters which appeared to be influencing the judge. Although it was unacceptable for the judge to reach a final decision before he was in possession of all relevant evidence and arguments which the parties wished to put before him, there was a clear distinction between reaching a final decision prematurely and reaching a provisional view which was disclosed for the assistance of the parties: E I Dupont de Nemours & Co v S T Dupont [2006] 1 WLR 2793 considered.
In the present case, the fair minded observer would have no difficulty in characterising the judge’s “preliminary view” document issued to the parties as a provisional view, disclosed for the assistance of the parties, not as a final determination reached before the adjudicator had considered the appellant’s submissions and evidence. Accordingly, the adjudicator’s decision was not tainted by apparent bias or apparent pre-determination and his award was enforceable.
Richard Wilmot-Smith QC, Karen Gough and Rachel O’Hagan (instructed by Barton Legal, of Leeds) appeared for the appellant; John Marrin QC (instructed by McGrigors LLP, of Glasgow) appeared for the respondent.
Eileen O’Grady, barrister
