Legal notes It’s fair to say that Ramsey J did not pull any punches as he left the High Court bench. Stuart Pemble considers one of his final judgments
Key points
- Parties applying for the appointment of an adjudicator must take the utmost care when making representations regarding who should or should not be selected
- Failing to do so could see the adjudicator’s award being set aside on jurisdictional grounds
The law, and construction law in particular, owes a huge debt of gratitude to Sir Vivian Ramsey. An engineer by training, he became one of the construction bar’s leading lights (including sharing joint editorial responsibility for the three most recent editions of the industry’s legal bible, Keating on Construction Contracts), with elevation to the High Court for a judicial career which included being head of the Technology and Construction Court and assuming responsibility for the implementation of the Jackson cost reforms.
However, he may not be missed by everyone he came across during his career, especially those who the judge decided had made fraudulent misrepresentations.
For the wider legal community, his most famous judgment will remain BSkyB Ltd v HP Enterprise Services UK Ltd [2010] EWHC 86 (TCC). Construction law anoraks, however, may savour the judge’s decision in Eurocom Ltd v Siemens plc [2014] EWHC 3710 (TCC), a case where an adjudicator’s decision was set aside on jurisdictional grounds because of a “strong prima facie case” that fraudulent misrepresentations were made by the claims consultant who acted for Eurocom in the adjudication. Apart from the quite remarkable nature of the successful jurisdictional challenge (which resulted in a professional adviser having his reputation tarnished – perhaps unfairly? – by an allegation of fraud), the decision is an increasing judicial rarity – a novel point to add to the case law regarding adjudication enforcement under the Housing Grants, Construction and Regeneration Act 1996 (the “1996 Act”).
The facts
Siemens was the main contractor employed by London Underground for work at Charing Cross and Embankment Tube stations. On 20 April 2011, Eurocom was appointed as Siemens’ subcontractor with responsibility for the installation of new communications equipment.
Disputes arose between Siemens and Eurocom regarding delay, variations, prolongation and disruption. Siemens attempted to terminate Eurocom’s contract on 1 August 2012 and, one week later, Eurocom commenced adjudication proceedings against Siemens for damages. The well-known adjudicator, Matthew Molloy, was appointed. He found against Eurocom, deciding that it owed Siemens £35,283.98. Eurocom refused to pay this and the judgment is silent as to whether or not Siemens took steps to enforce it.
Over a year later, in October 2013, Eurocom commenced fresh adjudication proceedings. On this occasion, another well-known adjudicator, Tony Bingham, was appointed by the RICS. In February 2014 (there had been a number of extensions to the 28-day period in which an adjudicator should reach a decision), Mr Bingham decided that Siemens owed Eurocom more than £1.6m.
Siemens refused to pay and Eurocom commenced proceedings to enforce Mr Bingham’s award by summary judgment.
Courts’ approach to adjudication awards
Ever since the landmark decision in Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] EWHC 254 (TCC); [1999] 3 EGLR 7, the courts have adopted a robust approach to enforcing adjudicators’ awards, even where they contain mistakes. The underlying point of legal principle is that adjudication under the 1996 Act is intended to provide a rough and ready approach to resolving disputes, resulting in a decision that is temporarily binding until the dispute is resolved finally; and the courts are unwilling to interfere with that process except in extreme cases.
The most common challenge is to argue that the adjudicator somehow lacked the appropriate jurisdiction or authority under the 1996 Act (and/or by a contract caught by the Act’s terms) to reach the decision in question. If that argument can be made out successfully, then this decision is not one to which the terms of the 1996 Act apply and the decision is not temporarily binding.
A new jurisdictional challenge
When a party applies to appoint an adjudicator, they are given the opportunity to provide the names of people who might have conflicts of interest. Mr Peter Giles of Knowles Ltd, acting for Eurocom, was asked this question by the RICS: “Are there any adjudicators who would have a conflict of interest in this case?” In reply, Mr Giles listed 13 separate people (including Mr Molloy) as well as anyone employed by a particular firm of solicitors (on the basis that the firm in question acted for Siemens). The problem for Eurocom was that the statement was untrue for a number of the people named, including Mr Molloy; a fact which Mr Giles admitted in his evidence.
Mr Giles also admitted that his answer to the conflict question was deliberate; he did not want any of the people named to be adjudicator. As such, Mr Giles had made a fraudulent misrepresentation.
Relying on long-established principles set out by the Court of Appeal in cases such as Lazarus Estates Ltd v Beasley [1956] 1 QB 702 and Rous v Mitchell [1990] 1 WLR 469 that fraud “unravels everything” (Lazarus), Ramsey J had no option but to hold that the fraud made Mr Bingham’s appointment a nullity.
Additionally, the judge found (in part influenced by the decision of Akenhead J in Makers v The Mayor and Burgesses of the London Borough of Camden [2008] EWHC 1836 (TCC)), that there was an implied term in contracts that a party would not act dishonestly. Mr Giles’s conduct was dishonest and therefore breached that term. That breach was sufficiently linked to the adjudication nomination process; something that went to the heart of Mr Bingham’s appointment. Following the principle established in IDE Contracting v RG Carter Cambridge Ltd [2004] EWHC 36 (TCC), where a failure to follow a correct adjudication process was so far reaching, it gave the court an alternative reason to agree to Siemens’ jurisdictional challenge.
A clear moral
Some commentators have suggested that the judgment is a bit harsh on Mr Giles. It is generally accepted that he was not the first professional to attempt to influence the identity of an adjudicator. However, the moral is clear – people looking to do so in the future proceed at great risk.
Ramsey J has left the TCC having opened up a whole new area of jurisdictional challenge. Notwithstanding the very clear warning given by this decision, we can expect further litigation on this issue in the years to come.
Stuart Pemble is a partner at Mills & Reeve LLP
