| Date | 21 June 2006 |
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| Judgment | Kier Regional Limited (t/a Wallis) v City & General (Holborn) Limited, (TCC) 6 March 2006 |
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| The Issue | Whether an adjudicator’s refusal to consider certain elements of the evidence will cause his decision to be invalid. |
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| Implication |
If an adjudicator declines to consider evidence which, on his analysis of the facts or the law is irrelevant, that decision will not constitute a breach of natural justice nor will it render the adjudicator’s decision invalid. |
printThe requirement to observe the rules of natural justice within adjudication proceedings has, in recent years, been the cause of much angst amongst those who practice as adjudicators within the construction industry. The rules of natural justice are often described as containing two fundamental requirements. The first is that the tribunal must be, and be seen to be, unbiased. The second requirement is that every party to a dispute must be given a fair opportunity to present its case and to answer the case of its opponent. Whilst the principles relating to bias are generally known and understood, it remains a problem for adjudicators as to how they can ensure that both parties are given a fair opportunity to present their case, or defence, when the process is confined to 28 days. In the recent case of Kier Regional v City & General the courts have now offered some welcome guidance on the introduction of new evidence and the adjudicator’s ability to disregard evidence. On 6 November 2001, Kier Regional Limited (trading as “Wallis”) entered into a contract with City & General (Holborn) Limited (“C&G”) for the refurbishment and rebuilding of the former Patent Office Library in London. The contract was the JCT 1998 Standard Form and the contract sum was £11,650,000. The Contract Administrator named in the contract was AYH. During the course of the works delays were incurred and numerous disputes between C&G and Wallis were referred to adjudication. The second adjudication concerned a dispute over Wallis’s extension of time claims. In that adjudication, the adjudicator awarded a 28 week extension of time in addition to the 31 weeks already awarded by AYH. Following that adjudication, Wallis proceeded to value the loss and expense flowing from the additional extension of time awarded. Wallis calculated this to be £1,330,012 and duly included that sum within its interim application no. 32. On 13 August 2004, AYH issued an interim certificate in respect of Wallis’s interim application No. 32. However, the sum certified in respect of the loss and expense had not increased from the previously certified sum of £527,192 which was based upon the previously awarded extension of time of only 28 weeks. Disgruntled with the apparent disregard for the adjudicator’s decision, Wallis launched a further adjudication in respect of its entitlement to loss and expense. The same adjudicator was appointed to decide the dispute. In response to Wallis’s claims, C&G advanced a four-fold defence. Firstly, the adjudicator had no jurisdiction as no dispute had yet crystallised. Secondly, the basis of Wallis’s calculation of loss and expense was not in accordance with the contract and, thirdly, the causes of delay were concurrent with other causes of delay for which Wallis was not entitled to loss and expense. Finally, if Wallis was entitled to loss and expense then the items of expense claimed did not relate to the periods of delay. In support of its defence C&G enclosed two new expert reports. Wallis contested C&G’s right to include the previously unseen material and invited the adjudicator to ignore the evidence contained within the expert reports. On 28 October 2004 the adjudicator delivered his decision, finding that Wallis was entitled to an additional sum of £719,295 in respect of loss and expense. In respect of the two expert reports he stated: “I find that the Driver Consult and Precept reports are new evidence not known to the parties at the time this dispute crystallised and I find that I should not take it into account in this Adjudication”.C&G refused to pay the sum contained within the adjudicator’s award. Consequently Wallis commenced enforcement proceedings in the Technology and Construction Court before The Honourable Mr Justice Jackson. In its defence to the enforcement proceedings, C&G claimed that the adjudicator’s refusal to consider the expert reports was ‘manifestly unfair’ and amounted to one of the plainest cases of a breach of natural justice. The question before the court was, therefore, did the adjudicator’s refusal to pay regard to the two expert reports cause his decision to be invalid? In the course of his judgment Mr Justice Jackson considered the recent case law relating to breaches of natural justice in adjudication, including the Court of Appeal decision in Carillion v Devonport Royal Dockyard. In that case the Court of Appeal confirmed that if an adjudicator declines to consider evidence which, on his analysis of the facts or law, is irrelevant, this is not necessarily a breach of the rules of natural justice. It may be that the adjudicator’s analysis in reaching that conclusion was wrong, but that mistake was not enough to render his decision invalid. Whilst Mr Justice Jackson found some merit in C&G’s contention that all the evidence should have been considered, he was not convinced that the mistake should invalidate the adjudicator’s decision. He stated that: “At worst, the Adjudicator made an error of law which caused him to disregard two pieces of relevant evidence, namely the expert reports of Driver Consult and Precept. In the light of the Court of Appeal’s decision in Carillion, that error would not render the Adjudicator’s decision invalid. |
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