| Date | 8 December 1999 |
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| Judgment | Bouygues UK Limited -v- Dahl-Jensen, TCC 17 November 1999 |
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| The Issue | Enforcement of adjudicator's decisions containing errors. |
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| Implication |
As the law presently stands the court will enforce an adjudicator's decision even where it is plainly based upon an error. |
printThe decision in the case of Bouygues UK Limited -v- Dahl-Jensen UK Limited provides further evidence of the robust manner in which the courts will approach the enforcement of adjudicator's decisions, even where it can be shown that the decision of the adjudicator is clearly wrong. Mr Justice Dyson said in the case that "it is inherent in the scheme that injustices will occur because from time to time adjudicators will make mistakes. Sometimes those mistakes will be glaringly obvious and disastrous in their consequences for the losing party." As if to illustrate this point Mr Dyson liberally peppered his own decision in the matter with arithmetical confusions. Bouygues was the main contractor for building works at Cornwall House, Kings College, London. Dahl-Jensen was the mechanical subcontractor. Before completion of the works Bouygues determined Dahl-Jensen's employment under the terms of the subcontract and Dahl-Jensen left site. They did not return and Bouygues arranged for the subcontract works to be completed by others. Shortly afterwards Dahl-Jensen initiated adjudication claiming approximately £5.2 million as damages for the late provision of design information, additional works and wrongful termination. Some three weeks later Bouygues issued its own notice to adjudicate claiming sums of approximately £5.7 million in respect of overpayment, liquidated damages for delay, and damages for costs incurred as a result of the termination. It was agreed that Bouygues' claim should be treated as a counterclaim to Dahl-Jensen's claim and consolidated into one adjudication. The adjudicator appointed was a solicitor. He in turn engaged the services of an assistant from an engineering practice to assist him in matters of quantum. There was no oral hearing and the adjudicator published his decision on the basis of the numerous documents put before him. In summary he found neither party entitled to anything approaching the amounts claimed. For Dahl-Jensen he held an entitlement of approximately £386,000 and for Bouygues an entitlement of approximately £646,000. It was then necessary to factor these sums into the payment situation as it existed between the parties. Starting with the original subcontract tender sum he added various items to produce a gross amount to which he considered Dahl-Jensen was entitled. From this he deducted sums due to Bouygues in accordance with his adjudication of the counterclaim and arrived at a gross figure payable. He then deducted the amount previously paid and stated that the difference, a sum of approximately £207,000, was an amount owing to Dahl-Jensen. That approach gave rise to a basic error. Retention at 5% had not yet been deducted from the gross amount as it should have been, since the works were not yet completed. The figure for previous payments did account for retention which had previously been deducted. The effect of this was to release the retention to Dahl-Jensen for the entirety of its subcontract works at a time when there was not yet an entitlement to it under the subcontract. If the 5% retention had been deducted from the gross sum to which Dahl-Jensen was found to be entitled, the overall effect would have been a net award of £141,000 in favour of Bouygues instead of a net award of £207,000 in favour of Dahl-Jensen. Upon receipt of the adjudication decision Bouygues' solicitors invited the adjudicator to correct the "slip". The adjudicator refused to do so, contending in any event that he was now functus officio as regards the decision. The matter came before the court. It was submitted on behalf of Bouygues that the adjudicator's decision in effect to award retention money to Dahl-Jensen was outside his jurisdiction and therefore could not be binding on the parties. In response Dahl-Jensen's application was for summary judgment in respect of the sum awarded by the adjudicator. Mr Dyson concluded that it would be convenient to start with the application for summary judgment, since if that succeeded, the remaining applications would fall away. Drawing a parallel with cases concerning property valuation by experts, Mr Dyson held that the correct approach was one whereby the nature of the mistake by the adjudicator was examined. If the mistake was that he decided a dispute that was not referred to him then his decision would be of no effect. If however the adjudicator decided a dispute that was referred to him, then it would remain a valid and binding decision even if the decision was mistaken and that mistake was of fundamental importance. Counsel for Bouygues argued that the effect of the decision was to award Dahl-Jensen the whole of the retention and since the parties were not in dispute that retention was not due for weeks, this showed that the adjudicator had decided a matter that was outside his jurisdiction. Counsel for Dahl-Jensen countered that by saying that if there was a mistake, it was a mistake in the adjudicator's calculations on the disputes and not a mistaken decision to deal with or purport to deal with a dispute that was outside his jurisdiction. Mr Dyson felt that this second argument was to be preferred and Dahl-Jensen's claim for summary judgment therefore succeeded. Despite the fact that this decision is clearly a correct interpretation of the law as it presently stands in relation to adjudication, there will be many in the industry troubled by it. If one party is permitted to enforce a decision which is plainly wrong, the other party will suffer an injustice and this will bring adjudication into disrepute. It may be preferable that eventually that the courts will develop ways of referring such clear errors back to adjudicators for their reconsideration. It is surely only a matter of time before the Court of Appeal is asked to examine the adjudication process.
CJ-9947
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