| Date | 7 January 1998 |
|
|
| Judgment | Dixons Group Plc -v- Jan Andrew Murray-Oboynski, ORB 23rd October 1997 |
|
|
| The Issue | Challenging the findings of an independent adjudicator acting as expert. |
|
|
| Implication |
The Courts will generally apply a contractual analysis to the consideration of an adjudicator's decision and thus the contract must set out the parameters within which a decision may be challenged or enforced. |
printThe much heralded Housing Grants Construction and Regeneration Act 1996 is expected to come into force in the spring of next year despite growing opposition. Section 108 of the Act requires that all construction contracts (which include agreements for professional services) must provide for the resolution of disputes by an adjudicator. The Act requires that the adjudicator should be appointed within 7 days, should decide the matter within 28 days unless extended by the referring party or by the agreement of both parties, and that the adjudicator should take the initiative in ascertaining the facts and the law. The construction contract must also provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration or by agreement. The overriding conceit of this Act is therefore that any dispute whether large or small, whether concerning delays, additional costs, defects, validity of engineer's instructions, or termination of the contract, shall all be capable of resolution within 28 days. On how exactly this is to be achieved within 28 days the Act is silent. The Act is equally silent as to the manner in which the adjudicator is to approach his function. For example, is the adjudicator to act judicially, or can he or she, in certain circumstances, decide simply upon the basis of a fair and commercially reasonable view of the disputed matters. One thing which is clear however is that the adjudicator is not an arbitrator, but is instead more in the nature of an expert valuer. To give a flavour of how adjudication may eventually operate it is therefore necessary to look outside the construction arena for guidance. The case of Dixons Group Plc -v- Jan Andrew Murray-Oboynski and others concerned the role of an expert accountant appointed to determine matters between the parties. The case concerned the sale by Murray-Oboynski and others to Dixons of a company called Vision Technology Group Ltd., retailing under the trading name of PC World. The sale was made in accordance with a written agreement in February 1993 for the sum of £4.06 million plus an amount equivalent to the value of the net assets at completion. In the event that the parties failed to agree the completion accounts, the sale agreement provided that an audit should be conducted by an accountant appointed under the terms of the agreement by the President of the Institute of Chartered Accountants. The agreement stated that "such firm shall act as experts and not as arbitrators and their decision shall be final and binding on the parties save in the case of manifest error". In due course the accountant, a Mr Jackson, was appointed and a detailed procedure was laid down for making and receiving submissions and responses to him. It was provided that Mr Jackson "shall be entitled to take such steps as he may, in his absolute discretion, consider necessary in order to determine the matters before him, including the right to call for any relevant information or documents in the possession of the vendors or purchaser". Mr Jackson was also given the power to take legal advice regarding any dispute as to interpretation of the agreement. In the event Mr Jackson received lengthy submissions and in that process each party was represented by well known accountants. He concluded that the group had net liabilities of approximately £24,000 and he attached appendices setting out detailed figures arriving at this sum. As he was entitled, and as was envisaged, he gave no reasons for his findings. There are many similarities to be seen between this particular exercise and the manner in which a construction adjudicator will be required to act. Disputes arose and the primary contention of Murray-Oboynski and the other Defendants was that the findings of Mr Jackson acting as expert and not as an arbitrator were not final and binding on them, because firstly he departed from his instructions, and secondly there were manifest errors in his determination. His Honour Judge Bowsher Q.C. recalled the statement of Lord Denning in Campbell -v- Edwards where it was said; "it is simply the law of contract. If two persons agree that the price of property should be fixed by a valuer on whom they agree, and he gives that valuation honestly and in good faith, they are bound by it. Even if he has made a mistake they are still bound by it. The reason is because they have agreed to be bound by it. If there were fraud or collusion, of course, it would be different. Fraud unravels everything". Dealing with the question of manifest error, Judge Bowsher concluded that to be manifest it must be plain and obvious on the face of his written decision. Since no such manifest error could be established accordingly the decision of Mr Jackson was to be held final and binding and could not be re-opened either directly or by the backdoor of a set-off.
CJ-9801
|
|||
|
© Brewer Consulting |
|||
 |
|||