The fact that an adjudicator makes an error in reaching his decision does not usually render the decision unenforceable. Orthodox thinking is that if an adjudicator gets it wrong, the result can be changed in "final" proceedings. On the other hand, the Construction Act requires adjudicators to act "impartially", which means that they have to give each party a fair hearing. But what happens if an adjudicator makes an error which has the effect of denying a party a fair hearing? The issue arose in the case of CJP Builders, decided last Friday, where:
The referring party (a subcontractor) sought to adjudicate an interim payment claim in the order of £100K.
- The subcontract terms (in the DOM/2 form) required the
responding party to make any written submissions within 7
days of the date of the referral. However, the responding
party said that it needed more than 7 days to respond - it
wanted 17 days.
- After some haggling over whether the responding party
should have an extension of time, the referring party said it
would agree to the responding party having until noon on date
X to respond.
- The responding party served its responsive submissions at
around 5:30pm on date X, i.e. after the noon deadline.
- The adjudicator disregarded the responding
party's submissions because they were served late.
The adjudicator said that if he had any discretion under the
subcontract to do so, he would have taken
those submissions into account. But he believed that the
subcontract did not give him the power to take into account
submissions that were served late.
- The adjudicator therefore found, in the absence of any
"admissible" material from the responding party,
that the subcontractor was entitled to the £100K or so
that it claimed.
The TCC refused to enforce the adjudicator's decision. The court said that the adjudicator was wrong not to consider the responding party's submissions, and that the subcontract did give him the power to do so. By not considering those submissions, the adjudicator had not given the responding party a fair hearing, i.e. the rules of natural justice had been infringed.
There could, however, be another way of looking at this factual scenario. The adjudicator made an error of law in his interpretation of the subcontract. The fact that an error of law was made did not mean that the adjudicator's decision was unenforceable, even if the effect of that error was to deny one of the parties a fair hearing. This is the approach that the Court of Appeal took in Carillion v Devonport Royal Dockyard (2005), a case which was not referred to in the CJP Builders judgment.
CJP Builders highlights the difficulties in working out whether (or not) a problem with an adjudication should cause an adjudicator's decision to be unenforceable. Much depends on how the error is characterised. Errors of law, fact or procedure are unreviewable, yet a denial of natural justice leaves an adjudicator's decision open to challenge. The error in CJP Builders could be characterised as falling into either camp.
Reference: CJP Builders Ltd v William Verry Ltd [2008] EWHC 2025 (TCC)
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 18/08/2008.
