| Date | 1 June 2005 |
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| Judgment | Ritchie Brothers (PWC) Ltd v David Philp (Commercials) Ltd, Inner House, Court of Session 24 March 2005 |
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| The Issue | Whether an adjudicator's decision delivered late will remain binding upon the parties. |
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| Implication |
In contradiction to the decisions of the Technology and Construction Court, the Scottish Appeal Court has held that adjudicator's decisions delivered out of time will be invalid. |
printThere has been a long standing debate about whether an adjudicator's decision reached after the expiry of the relevant time period will remain a valid decision capable of enforcement. This uncertainty is compounded as it is often unclear when the time period begins to run. The Scheme for Construction Contracts provides that the adjudicator "shall reach his decision not later than 28 days after the date of the referral notice". That seems clear enough. It refers to the date of the referral notice, not the date that the adjudicator receives the referral notice. The 1996 Act requires the adjudicator to reach a decision "within 28 days of referral", which on its own is slightly less certain. The JCT standard forms of contract clarify this by providing the adjudicator shall reach his decision "within 28 days of the receipt of the referral". It is unfortunate that these phrases are not uniformly worded. In the recent case of Ritchie Brothers v David Philp the court indicated that under the Scheme, time starts to run from the date of the referral. Because of a mishap in the post, the referral notice did not come into the adjudicator's hands until five days after posting. Those five days were effectively lost to the adjudicator as time had already started to run. This would not have been the case if a JCT contract had applied. With this level of uncertainty, it is not surprising that some adjudicators may fall into error by delivering their decisions late. There has been a number of court decisions dealing with the question of whether a decision delivered out of time would be rendered invalid and unenforceable. In Barnes and Elliott v Taylor Woodrow and George Whimpey in June 2003, the adjudicator made his decision in time but sent it to the parties by post. It arrived one day after the deadline had expired. Judge Humphrey Lloyd QC held that although technically the adjudicator's decision should have been delivered to the parties by the agreed deadline, the decision was nevertheless enforceable. The time limits set by Section 108 of the Construction Act were important for the effectiveness of the adjudication process, but compliance with the time limit was not a dominant factor. However, Judge Lloyd noted that that tolerance did not extend to any longer than a day or two. In Simons Construction v Aardvark Developments in October 2003, a similar question arose. In that case the adjudicator had issued a draft decision on the last day for issuing his decision and seven days later signed and dated the draft decision and reissued it as a final decision. Judge Seymour accepted that the draft decision was of no effect, being neither signed nor dated. Nevertheless the final decision of the adjudicator, although given one week later than required, remained binding upon the parties. The construction contract, which reflected paragraph 19 of the Scheme, provided that if the adjudicator should fail to reach his decision in accordance with the agreed time scale, then either of the parties would be free to serve a fresh notice of adjudication and appoint a new adjudicator. It was implicit in these provisions, according to Judge Seymour, that until the parties had terminated the adjudication agreement and given a fresh referral notice, the adjudicator retained jurisdiction to determine the dispute. These matters were also examined by the Inner House of the Court of Session in Scotland in the previously mentioned case of Ritchie Brothers v David Philp. The Scottish Law Lords disagreed with the decisions of the English judges in the Barnes and Elliott and Simons cases. The adjudicator's decision had been delivered 11 days late. Following the Simons case, the judge at first instance held that the expiry of 28 days from the date of the referral did not bring the adjudicator's jurisdiction to an end. The provisions within the Scheme relating to the time scale in which the adjudicator should reach his decision were directory rather than mandatory. The Appeal Court disagreed. There were two possibilities for interpreting the Scheme. Either the adjudicator's jurisdiction expired at the end of 28 days (or any extended period) or his jurisdiction continued after that date and remained in existence until one of the parties served a fresh notice of adjudication under paragraph 19(2) of the Scheme. By a majority of 2-1 the appeal judges considered that paragraph 19 of the Scheme meant exactly what it said; it was not open to an adjudicator to reach his decision after the expiry of the time limit. Lord Justice Clerk noted that it was worth bearing in mind that the situation that had occurred in the case need never have arisen. Adjudications involve parties who are, in general, professionally advised and therefore familiar with construction law and practice and with the 1996 Act and the Scheme. Equally, adjudicators are specialists who may be assumed to know and understand the provisions of the Act and the Scheme and who may be expected to comply with them. Lord Justice Clerk commented that an adjudicator should be able to assess the prospects of his reaching a decision within 28 days as soon as he receives the papers, and if he is in doubt he should at once seek consent to extension of time under paragraph 19(1).
CJ-0521
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