| Date | 5 March 2003 |
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| Judgment | Joinery Plus Ltd v Laing Ltd, TCC 15 January 2003 |
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| The Issue | Whether errors will invalidate the decision of an adjudicator. |
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| Implication |
Where an adjudicator apparently applies the wrong subcontract terms in arriving at his decision, the decision may be unenforceable, whether or not the decision is shown to be materially incorrect. |
printAdjudication conducted under the provisions of the Housing Grants, Construction and Regeneration Act 1996 is sometimes fast and furious. Very complex disputes require to be decided within a period of 28 days. It is not surprising that errors will be made. The courts have decided that, providing an adjudicator has the necessary jurisdiction to make his decision, any errors he makes will be ignored and his decision enforced. In other words, the adjudicator will have the jurisdiction to make a wrong decision as well as to make a right decision. Two decisions of the Court of Appeal exemplify this approach. In Bouygues (UK) v Dahl Jensen (UK) Ltd, the parties presented claims and cross claims to an adjudicator. The adjudicator found a net balance in favour of the subcontractor Dahl Jensen, but, in undertaking the arithmetical exercise needed to ascertain that sum, the adjudicator took a gross sum which included payment retentions, and deducted the sum already paid which did not include retention. The effect of this approach was to release the payment retentions when no such claim had been made. Bouygues should have been awarded £140,000 on the basis of the adjudicator's findings. The result of the arithmetical error was that Bouygues was instead ordered to pay approximately £207,000. The Court of Appeal held that it could not interfere with this decision, since the adjudicator had full jurisdiction to make the decision he had made, however erroneous it was. In C & B Concept Design v Isobars Ltd, it was said that the adjudicator had misapplied a term of the contract between the parties to the effect that the sub-contractor should be paid in full the amount of its interim applications for payment. Again the Court of Appeal declined to interfere with the adjudicator's decision, on the basis that, whether or not that decision was wrong in law, the adjudicator had been obliged and entitled to make such a decision in the course of determining the matters put before him. The message therefore appears to be that providing the adjudicator is dealing with the matters which have been referred to him for his decision, any errors that he makes in arriving at his decision will not be reviewable and will not impact upon the enforceability of the decision. However, not all adjudicator errors will be ignored in this way. In the case of Joinery Plus Ltd v Laing Ltd, the adjudicator appeared to make his decision concerning the dispute between the parties by reference to the wrong set of contract conditions. Joinery had undertaken two subcontracts for Laing, one based on the standard DOM/2 Sub-contract conditions and a second based upon the JCT Works contract conditions. Disputes arose in connection with both these contracts and the same adjudicator was appointed in each case. The first adjudication concerned the JCT Works Contract and in May 2001 the adjudicator issued his decision in respect of that dispute. Some four months later a second adjudication was commenced concerning the subcontract based upon the DOM/2 form of contract. In delivering his decision in connection with this second adjudication, it appears the that the adjudicator used his first decision as a template. Throughout that decision reference was therefore erroneously made to the JCT Works contract. Although the decision ordered that Laing should pay Joinery some £58,000, Joinery were unhappy with this outcome, given that their claim had been for an amount of approximately £700,000. Moreover, the repeated references to the JCT Works contract within the adjudicator's decision did not inspire confidence that the adjudicator had properly taken into account all of the contract documents appropriate to the dispute between the parties. Although Joinery had received payment of the £58,000, it contended that the adjudicator's decision was a nullity and that it should be free to commence a fresh adjudication in which all of the matters which had earlier been raised should be reconsidered. Laing contended that the reference to the wrong subcontract conditions was not material to the adjudicator's decision. The adjudicator had carefully considered the merits and substance of Joinery's case and had conducted the adjudication properly. The outcome would be the same whichever subcontract conditions were applied and there was no indication that the adjudicator had wrongly decided the matters between the parties. The matter proceeded to court, where Joinery submitted that it was not necessary for it to show that there had actually been a mistake or that the mistake actually affected the result. It was sufficient for the reasons given by the adjudicator to give rise to a reasonable concern that the wrong question had been asked. Moreover, Joinery went on to argue that the adjudicator had indeed applied the wrong terms of the contract in dealing with certain components of the claim which rendered the decision in its entirety a nullity. His Honour Judge Thornton QC preferred the submissions made on behalf of Joinery. He accepted that there was at least one material difference between the two sets of subcontract terms which might have affected the manner in which the adjudicator had arrived at his decision. It followed that the adjudicator's errors went to the heart of his jurisdiction, which was to decide the referred dispute under the actual construction contract between the parties. The errors were therefore fundamental and were not capable of being corrected. In conclusion, Joinery would be free to commence a fresh adjudication, but was also entitled to hold on to the £58,000 it had received on the basis that such a sum had been paid generally on account of Laing's contractual obligations to pay Joinery.
CJ-0308
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