Adjudication á la carte

The case of Cantillon vs Urvasco suggests that the parties, the adjudicator and the enforcing court have a great deal of latitude when it comes to presenting arguments and judging them

“Only when the toing and froing stops can the adjudicator adjudicate. Expensive? A tad. Intended by parliament? Dear me, no”

The adjudicator in Cantillon vs Urvasco came out unblemished. Truth is, it needed a very experienced and highly qualified individual to manage the affair. In truth, too, the complexity of the adjudication was very high, and it went the way so many adjudications go these days – well past the 28 day mark. In fact, it took five months. And let me tell you a secret: that’s normal. In a moment I’ll tell you why.

So who are these firms? Well, Urvasco is developing The Silkin, a five-star hotel in the Strand, London. Cantillon is carrying out demolition and piling under a £4.5m main contract. Delays occurred. Extensions of were awarded. Several adjudications took place. The last awarded cash to the contractor, but the employer would not obey. So they came to court.

There are three points here. First, I keep being told by respondents that they can enter any defence, even a surprise one. Second, we have the question of how far an adjudicator can decide an issue on a basis other than that advanced by the parties, albeit on the materials put to them. Third, can the court “blue pencil” some parts of the adjudicator’s awards and enforce other?

So, what about having the right to enter any defence? No doubt respondents will point adjudicators and referring party to this case, in which the judge said: “In my view, one should look at the essential claim that has been made and the fact that it has been challenged, as opposed to the precise grounds upon which it has been rejected or not accepted. Thus, it is open to any defendant to raise any defence to the claim when it is referred to adjudication or arbitration. Similarly, the claiming party is not limited to the arguments, contentions and evidence put forward by it before the dispute crystallised. The adjudicator or arbitrator must then resolve the referred dispute, but can consider any argument, evidence or other material for or against the disputed claim or assertion in resolving that dispute.”

Consider these words in the context of the notice of adjudication, the document that may torpedo the “any defence can be run” notion. The notice may be written so narrowly that the adjudicator cannot hear any new material. In Cantillon it was very wide; it asked how much loss and expense was owed by the employer to the contractor. Then what happened? In comes the all-singing, all-dancing defence. The referring party enters a reply to the defence. Then the 28 days timetable gets the heave-ho, the parties bash the tennis ball over the net at each other with replies, rejoinders, rebuttals and meetings and 28 days turns into 28 weeks and more. Only when the toing and froing stops can the adjudicator adjudicate. Expensive? A tad. Intended by parliament? Dear me, no.

Second point: where an issue or claim is not made out, but the adjudicator uses the materials to provide a part-successful result for that party. Let me explain. Cantillon asked for loss and expense for a particular date. The opponent argued that none of the loss and expense could apply for that date and should fail. Cantillon argued it was open to the adjudicator to “exercise judgment” and use the materials from the parties to fathom the loss and expense for the correct period. The adjudicator did so and the court said it would not set it aside. So, adjudicators do try to “just referee” the materials presented, but sometimes also do a bit of quantity surveying.

The third point: can the court strike bits out of an adjudicator’s award? It was argued that if the adjudicator has, for example, been unfair, then the whole decision is unenforceable. Not so, says the court. In short, if the bad can be severed and the rest still makes sense, the rest survives.

Mind you, given that errors of procedure, law and fact by adjudicators don’t affect the validity of their decision, and given the Court of Appeal’s message that “it should only be in rare circumstances the court will interfere with the decision of an adjudicator”, the chances of bombing an award are slim.

Readers are invited to forward recent judgments for reporting in this column (with full acknowledgement) to: Tony Bingham, 3 Paper Buildings, Temple, London EC4Y 7EU. DX: 37164 Biggleswade

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