A fine point can scupper adjudication
- Published: 26 August 2008 17:56
- Last Updated: 26 August 2008 17:57
A seemingly abstract distinction in law can have grave consequences in the real world
The refusal by the Technology and Construction Court to enforce the adjudicator's decision in CJP v Verry earlier this month shows the legal ambiguity that can exist in such cases.
The case revolved around a dispute between brickwork subcontractor CJP and building contractor William Verry.
CJP wished to adjudicate an interim payment claim in the order of £100,000 and the rules of the subcontract stated that Verry had seven days in which to produce written submissions.
Verry sought extra time to make its submissions, asking for 17 days. An agreed time and date for the submission was negotiated but Verry handed the submissions in at 5.30 pm on this date, after the agreed submission deadline of noon.
The adjudicator disregarded the evidence because of its lateness, ruling that if he had any discretion under the subcontract to do so, he would have taken those submissions into account, believing that the subcontract did not give him the power to take into account submissions that were served late. As a result, he found in favour of the subcontractor.
But the TCC refused to enforce the adjudicator's decision, something the Court does not technically tend to do, stating he 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.
Adjudication is something of an evolving beast, despite the Construction Act having been running for some 10 years.
Difficulties arise because adjudicators are required to give the parties a fair hearing – in legal terms adjudicators are required to act 'impartially' and 'afford natural justice'.
Each party should be given a reasonable opportunity to present its case. The failure by the adjudicator to give Verry a reasonable opportunity of presenting its case resulted in his decision being unenforceable.
But there could be another way of looking at this case. The adjudicator simply made an error of law in his interpretation of the subcontract. This error led to Verry's case not being considered, but it is the sort of error that is inherent in the adjudication process.
Tricky decision
CJP v Verry highlights the difficulties in working out whether an error made by an adjudicator causes his or her 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 v Verry could fall into either camp.
The definitions may seem abstract, but the consequences highlight their importance. CJP Builders are now in liquidation, and one can speculate that if the adjudicator's decision was enforced, it may have stopped the brickwork subcontractor from going under – the very thing the Construction Act seeks to avoid.
Julian Bailey is a solicitor at CMS Cameron McKenna, specialising in construction law
