| Date | 28 February 2007 |
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| Judgment | Cubitt Building & Interiors Ltd v Fleetglade Ltd, [2006] EWHC 3413 (TCC), 21 December 2006; Epping Electrical Company v Briggs and Forrester (Plumbing Services) Limited [2007] EWHC 4 (TCC), 19 January 2007 |
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| The Issue | The validity of a referral served late and the validity of an adjudicator’s decision issued after the date for reaching the decision. |
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| Implication |
In general, an adjudication referral will not be valid if served later than 7 days from the date of the notice of adjudication. An adjudicator must reach his decision within the agreed timescale and for the avoidance if doubt should issue the decision on the same day. An adjudicator cannot exercise a lien over his decision. |
printFollowing the article by Owen Fox on 13 December 2006 in which he discussed the decision in Hart v Fidler, there have since been two more decisions from the TCC dealing with statutory timescales in adjudication. On the facts however the outcomes were somewhat different. Hart v Fidler reviewed In Hart v Fidler, HHJ Peter Coulson QC had to decide whether a referral was valid, it having been served 8 days after the notice of adjudication. This is the first time this point had come before the court. This was a Scheme adjudication, paragraph 7 (1) of which states that the referral must be provided not later than 7 days after the notice of adjudication. HHJ Couslon decided that an adjudicator is not seized of the adjudication and therefore has no power until the referral notice is provided, and he confirmed that an adjudicator must reach his decision within 28 days of the referral (or any agreed extension to that timescale). He decided that the referral should have been served within 7 days of the notice of adjudication and late service of the referral meant that it was invalid. Hart had not waived the irregularity so the adjudicator had no jurisdiction and his decision was a nullity. Cubitt v Fleetglade Then came the decision by HHJ Coulson in the case of Cubitt Building & Interiors Ltd v Fleetglade Ltd, [2006] which considered both the late service of the referral (8 days after the notice of adjudication), and the validity of an adjudicator’s decision issued a day later than the extended date for the decision to be reached. This concerned an adjudication under the JCT adjudication procedure in the JCT 98 Standard Form of Building Contract. Clause 41A.4.1 of the contract requires that if the adjudicator is appointed within 7 days of the notice of adjudication then the referring party shall provide its referral within 7 days of the notice. The judge decided that a failure to comply with this mandatory requirement will render the adjudication a nullity. The clause however goes on to say that if the appointment is not made within 7 days of the notice then the referral shall be made immediately upon such appointment. The twist in this case arose on the facts. The RICS had been unusually slow in securing the appointment of the adjudicator who confirmed his appointment to the parties at 17.35 on the seventh day after the notice. The referral was served on the following day. On the facts HHJ Coulson decided that the referral was valid. He considered that the bulk of the delay was caused by the RICS and the referring party should not be penalised for this, and more importantly the terms of clause 41A.4.1 needed to be interpreted sensibly such that an appointment of an adjudicator right at the end of the business day meant that service of the referral the following day amounted to service immediately upon the appointment. The judge then had to consider the validity of a decision issued by e-mail just after midday on Saturday 25 November, the day after it was due to have been reached. At 22.45 on Friday 24 November the adjudicator advised by e-mail to the parties that he had completed his decision but that it was subject to a final proof and arithmetical checking. He also indicated that he was considering exercising a lien. Given the time, neither party responded and the adjudicator then decided to issue his decision the following day without waiting for confirmation of payment. HHJ Coulson confirmed that the requirement for an adjudicator to reach a decision within the timescale is mandatory, a failure to do so will result in the decision being a nullity and, in accordance with the contract the decision should have been communicated forthwith. The Judge confirmed that it is not open to an adjudicator to exercise a lien on his decision since this could bring about a lengthy delay between reaching the decision and communicating it which, he said, was contrary to the whole principle of adjudication. He was satisfied that the decision had been reached within the timescale, and that the adjudicator was mistaken in exercising the lien. He decided Cubitt should not be penalised for that mistake and found that the decision was valid. The Judge said that e-mail or fax meant that the time for the communication of a decision should be very short – ‘a matter of a few hours at most’, and that a decision issued after the middle of the day after the final deadline would not amount to issuing it ‘forthwith’. The final warning from the judge to all adjudicators is that in such circumstances, if a decision is communicated late then it will be a nullity. There may be a complete failure of consideration resulting in no entitlement to fees and a possible claim for damages from the injured party. Epping v Briggs The subsequent case of Epping Electrical Company Ltd v Briggs and Forrester (Plumbing Services) Ltd [2007] also deals with the question of whether an adjudicator's decision can be valid when it has been communicated late. The adjudicator reached his decision by the agreed date of 21 November 2006, but then delayed communicating the decision until 23 November 2006, whilst seeking payment before its release. HHJ Havery confirmed that the requirement to reach a decision within the timescale was mandatory. He also found that there was a distinction between reaching a decision and communicating it. However, on the facts, he found that the terms of the letter agreeing to an extension of the timescale made it a condition of the extension that the decision was actually issued by that date. The fact that the decision was issued late had the effect that the extension had not been granted and the decision was invalid. In summary, a referral served late is likely to be invalid and the adjudicator will not have any jurisdiction. Adjudicators should not seek to exercise a lien and should not delay the delivery of the decision for any reason.
CJ-0708
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