1. Can the adjudicator actually do this?
2. What can be done to avoid this unwanted outcome?

From a practical point of view, the more complex the matter the less time the adjudicator has to make enquiries of his own into the matters in dispute. Thus although the adjudicator has the power (but no obligation) to ascertain the facts and the law often he does not have the time. The TeCSA procedure quoted above uniquely seeks to provide the adjudicator with a solution to this dilemma. However, in our experience, it is uncommon in English contracts and not incorporated into Scottish and Irish contracts.

Even if incorporated, this approach should not be relied upon by the referring party. In general, if the case has not been clearly argued and has limited merit, then a party to an adjudication is likely to come a cropper if it hopes that the adjudicator will in some way fix the defects in its case, or give it the benefit of the doubt, or even provide a decision that reflects a compromise. There is only one referral (and that must reflect a pre-existing dispute) but the other party can respond in very wide terms, whether these have been canvassed previously or not², and so the referring party must get its case right from the start.

His Honour Judge Lloyd QC³ has observed that: "If it [adjudication] is to be utilised effectively, it is essential that the referring party gives the adjudicator all that is needed in a highly manageable form.." It is therefore essential for the parties to set out their respective cases in the clearest and most accessible way possible, and to assist the adjudicator with the task of navigating through the issues and the supporting documents.

If this is not done, then there is the very real risk that some adjudicators may rather too readily conclude that the referring party has failed to prove its case, in other words a decision that the referring party has failed to satisfy the burden of proof. But is that approach justified?

Evidence and the burden of proof

Evidence is information by which facts tend to be proved and may take the form of testimony, hearsay evidence, documentary evidence, real evidence, circumstantial evidence, or opinion evidence.

The burden of proof is the obligation to prove an assertion. There are two kinds of burden, the legal burden of proof and the evidential burden of proof. The legal burden of proof is the rule of evidence whereby a party making an assertion about a fact in issue is under a duty to prove it in order to succeed. The evidential burden of proof is the obligation of the party making an assertion to provide or adduce sufficient evidence of sufficient quality to persuade the tribunal that their account of the facts is to be preferred. After both parties have adduced all of their evidence, the tribunal of fact makes the decision as to whether a party has proved a fact in issue and therefore satisfied the legal and evidential burdens of proof.

In deciding upon finding a fact, the tribunal must give weight to each of the components of the evidence placed before it by the parties in connection with that fact. In our view that concept applies equally to adjudication as to more lengthy processes such as arbitration.

The scope for an adjudicator to decide that the burden of proof has not been met

There is likely to be limited time (although time can be extended by agreement) for an adjudicator to investigate the matters in dispute. The approach often adopted by adjudicators is therefore to look at the evidence of the parties and decide which is to be preferred in relation to each issue and then adopt that position. This is a very common approach adopted in relation to the resolution of disputes about the value of interim payments for example.

If it is clear that the case made is hopeless and the burden of proof has not been discharged then the adjudicator is entitled to conclude and indeed should conclude that the burden has not been satisfied.

It must be borne in mind that the standard of proof is to demonstrate that on the balance of probabilities the assertion is true (i.e. more than 50% likely). Thus, if the evidence is very evenly balanced, then the adjudicator is also entitled to decide that the burden has not been satisfied.

However, in the recent case of Stephens v Cannon⁴, the Court of Appeal was asked to review a lower court decision in relation to the valuation of a house which had been decided on the basis of the burden of proof. Mr Justice Wilson analysed a number of cases from which he drew a series of propositions. One case in point was the case of Cooper v Floor Cleaning Machines Ltd and Crompton⁵ . In this case the Court of Appeal found that the lower court had been wrong to dismiss both the claim and counterclaim for failure to discharge the burden of proof, and found that the judge erred in failing to analyse the evidence and that, had he done so, he would have found that the defendants had discharged the burden of proof. It was also found that before resorting to dismissal for want of discharge of the burden of proof, a court should raise with Counsel the possibility that such a course might have to be taken.

Mr Justice Wilson at paragraph 46, set out 5 propositions, the two principal ones being as follows:

(a) The situation in which the court finds itself before it can despatch a disputed issue by resort to the burden of proof has to be exceptional. . .

(c) The exceptional situation which entitles the court to resort to the burden of proof is that, notwithstanding that it has striven to do so, it cannot reasonably make a finding in relation to a disputed issue. . .

In this case, it appears that the trial judge had not done enough to evaluate the evidence and had set himself the task of trying to adopt one or other of the two party's valuations. Justice Wilson observed at paragraph 49 that "had the master asked himself not "which of the two valuations should I accept?" but "what, in the light of the evidence of the two valuers, was the probable value of the property?" and had he then not merely noted some of the specific differences between the valuers but sought to adjudicate in relation to them, he might well, I believe, have been able to answer it." The appeal was allowed and the proper valuation referred back to the court.

In summary

There will be circumstances where it is quite appropriate for an adjudicator to conclude that a party has failed to satisfy the burden of proof and discharge an issue on that basis. If he does so then, although he may not be required to give reasons, he probably has a duty to explain the investigation carried out and why such a decision has been reached. It is not so clear if the concept of notifying Counsel (or the parties) prior to dismissal is practical in the short time scale of adjudication.

We suggest that whilst adjudication generally does not require the adoption of court procedures and some adjudication procedures may exclude the requirement to follow the rules of evidence (but do not prohibit their use), there is a basic obligation on an adjudicator to do his job. That is to decide the issues referred to him within the required 28 or 42 day statutory timescale. If he cannot properly achieve this objective he must resign or seek an extension. What in the authors' view he should not do is fail to engage with the case and too readily despatch an issue on the basis of the burden of proof. Whilst the Stephens v Cannon case underpins this thinking, adjudication is different to litigation and there is likely to be limited scope in complex adjudications for investigation of the facts. However in our view, the adjudicator should always do his best whilst balancing the investigation against the exigencies of the timetable and the cost of the adjudication.

¹ which must be complied with if the recent Scottish Inner House Court of Session case of Ritchie Brothers (Pwc) Ltd v. David Philp (Commercials) Limited [2005] ScotCS CSIH_32 is to be followed outside Scotland. In this case it was decided that a decision was invalid if it was delivered even one day late. This is contrary to a number of earlier Outer House decisions. It is also contrary to the decision in the English case of Simons Construction Limited V Aardvark Developments Limited [2003] EWHC 2474 (TCC), in which Judge Seymour QC decided that an adjudicator's decision delivered 7 days late was still valid.
² William Verry (Glazing Systems) v Furlong Homes Ltd [2005] EWHC 138 (TCC).
³ Balfour Beatty Construction Ltd v The Mayor Burgess of the London Borough of Lambeth [2002] BLR 288: 84 Con LR1, at paragraph 30.
⁴ [2005] EWCA Civ 222.
⁵ The Times, 24 October 2003.

- Rob Palles-Clark and David Carrick