| Date | 17 November 2004 |
|
|
| Judgment | Amec Capital Projects Limited v Whitefriars City Estates Limited, CA 28 October 2004 |
|
|
| The Issue | The enforcement of adjudicator's decisions. |
|
|
| Implication |
An adjudicator's decision upon whether he has jurisdiction to proceed with the adjudication does not affect the parties rights and is therefore not subject to the rules of natural justice. |
printIn April of this year I reported the case of Amec Capital Projects v Whitefriars City Estates in which the court had refused enforcement of an adjudicator's decision. The court found that certain procedural steps taken by the adjudicator had amounted to a breach of natural justice. This decision has now been reviewed by the Court of Appeal and overturned. Amec had been engaged under a letter of intent to carry out certain pre-construction services for Whitefriars in connection with a building development in Tudor Street, London. The letter of intent formed the basis of a contract between the parties incorporating the JCT 1998 standard form with Contractor's Design. The letter had provided that the parties would negotiate a second stage tender for the main building works. Amec carried out pre-construction services on site for a period of approximately three months. At that point however, Whitefriars determined Amec's contract because the parties could not agree on the second stage tender. By that stage Amec had submitted invoices for £204,000, which had been paid, and further invoices for a sum in excess of £500,000, which had not been paid. Negotiations between the parties failed to resolve the impasse in connection with these payments and almost two years later Amec gave notice of adjudication for the wrongful withholding of monies due to it in the sum of approximately £500,000, plus VAT. An adjudicator was duly nominated by the RIBA who decided in favour of Amec for the full amount. Whitefriars failed to comply with that decision which then came before His Honour Judge Lloyd QC on enforcement proceedings. Judge Lloyd refused to grant enforcement of the decision. He held that an alternative adjudicator had been named in the contract between the parties, and therefore the adjudicator nominated by the RIBA had not been validly appointed and had no jurisdiction to make the decision. It emerged soon after that hearing however that the adjudicator named in the contract between the parties had sadly died some time before the dispute had been referred to adjudication. Armed with that knowledge, Amec recommenced the adjudication applying to the RIBA a second time for the appointment of an adjudicator, suggesting that the first adjudicator might be re-nominated in the interests of saving time and costs. The RIBA duly obliged and a second adjudication, essentially on the same facts, was commenced. This time however, Whitefriars responded with a notice of a withholding and a counterclaim. It advised that since the contract had been terminated between the parties, the situation that prevailed was that Amec would not be entitled to any further payment until another contractor completed the works. Whitefriars suggested that Amec would only become entitled to the difference, if any, between what it would have earned by completing the contract and what Amec's breach had cost the employer. This brazen approach appeared to ignore the fact that the determination had been brought about by both parties' failure to agree terms for the carrying out of the building works. Whitefriars also indicated that it would bring a substantial counterclaim, which it valued in the amount of £1.2 million. The adjudicator rejected Whitefriars' counterclaim and set-off, saying that it was a separate and independent claim and therefore outside his present jurisdiction. He ordered that Whitefriars should pay Amec the full amount claimed plus VAT. Once again, Whitefriars refused, and the parties appeared in court for enforcement of the adjudicator's decision. In the Court of Appeal Lord Justice Dyson carefully reviewed the various complaints from Whitefriars. He agreed with the earlier judge that the mere fact that the adjudicator had previously decided the issue was not of itself sufficient to justify a conclusion of bias. He noted that there needed to be something of substance to lead a fair minded and informed observer to conclude that there was a real possibility that the tribunal would not bring an open mind and objective judgment to bear. Lord Justice Dyson disagreed however with the earlier trial judge on a second point raised by Whitefriars which had led the earlier judge to refuse enforcement. The earlier judge had concluded that where an adjudicator is seeking advice from a third party, whether in connection with a legal question or the technical merits of the case, it was essential that the adjudicator discloses the substance of the advice given to him and gives the parties an opportunity to comment upon it before he reaches his decision. Justice Dyson commented that the advice that the adjudicator had received had been in connection with queries raised over his jurisdiction. Since the decision of an adjudicator as to his jurisdiction is not binding upon the parties and could not affect the rights of the parties, it was difficult to see the justification for any suggestion that an adjudicator could only make such a decision after giving the parties an opportunity to make representations. Whilst adjudicators would be well advised to give the parties the opportunity to make representations on the issue of jurisdiction, an adjudicator who decides to proceed with an adjudication could not be acting in breach of natural justice if he failed to do so. That point, together with a number of other points raised by Whitefriars to resist enforcement, was rejected by Lord Justice Dyson. The Appeal Court concluded that none of these complaints justified a conclusion that there had been any apparent bias of the part of the adjudicator. Accordingly the court allowed the appeal by Amec for enforcement of the adjudicator's decision.
CJ-0446
|
|||
|
© Brewer Consulting |
|||
 |
|||