Cases - Carillion Construction Ltd v Devonport Royal Dockland [2005]

Record details

Name
Carillion Construction Ltd v Devonport Royal Dockland
Date
[2005]
Citation
EWHC 778 (TCC)
Legislation

Scheme for Construction Contracts (England and Wales) Regulations 1998

Keywords
Construction contracts - adjudication - jurisdiction - natural justice - fairness - adequate reasons - consideration of evidence - defects - power to award contractual interest - Scheme for Construction Contracts (England and Wales) Regulations 1998, paragraphs 20 and 22
Summary

Following the various submissions of the parties during the course of the adjudication, the adjudicator was served with 29 lever-arch files of material. The adjudicator decided that Devonport should pay Carillion the total sum of £10.6m plus VAT within 7 days.

Devonport refused to pay and Carillion referred the matter to the courts. In the course of his judgment the judge restated four basic principles:

  1. The adjudication procedure does not involve the final determination of anyone's rights (unless all parties so wish).
  2. The Court of Appeal has repeatedly emphasised that adjudicators' decisions must be enforced, even if they result from errors of procedure, fact or law.
  3. Where an adjudicator has acted in excess of his jurisdiction or in serious breach of the rules of natural justice, the court will not enforce his decision.
  4. Judges must be astute to examine technical defences with a degree of scepticism consonant with the policy of the 1996 Act. Errors of law, fact or procedure by an adjudicator must be examined critically before the court accepts that such errors constitute an excess of jurisdiction or serious breaches of the rules of natural justice.

Having restated the four basic principles, the judge made 5 propositions:

(1) 'If an adjudicator declines to consider evidence which, on his analysis of the facts or the law, is irrelevant, that is neither (a) a breach of the rules of natural justice nor (b) a failure to consider relevant material which undermines his decision on Wednesbury grounds or for breach of paragraph 17 of the Scheme. If the adjudicator's analysis of the facts or the law was erroneous, it may follow that he ought to have considered the evidence in question. The possibility of such error is inherent in the adjudication system. It is not a ground for refusing to enforce the adjudicator's decision. I reach this conclusion on the basis of the Court of Appeal decisions mentioned earlier. This conclusion is also supported by the reasoning of Mr Justice Steyn in the context of arbitration in Bill Biakh v Hyundai Corporation [1988] 1 Lloyd's Reports 187.

(2) On a careful reading of His Honour Judge Thornton's judgment in Buxton Building Contractors Limited v Governors of Durand Primary School [2004] 1 BLR 474, I do not think that this judgment is inconsistent with proposition 1. If, however, Mr Furst is right and if Buxton is inconsistent with proposition 1, then I consider that Buxton was wrongly decided and I decline to follow it.

(3) It is often not practicable for an adjudicator to put to the parties his provisional conclusions for comment. Very often those provisional conclusions will represent some intermediate position, for which neither party was contending. It will only be in an exceptional case such as Balfour Beatty v the London Borough of Lambeth that an adjudicator's failure to put his provisional conclusions to the parties will constitute such a serious breach of the rules of natural justice that the court will decline to enforce his decision.

During argument, my attention has been drawn to certain decisions on the duty to give reasons in a planning context. In my view, the principles stated in these cases are only of limited relevance to adjudicators' decisions. I reach this conclusion for three reasons:

  1. decisions do not finally determine the rights of the parties (unless all parties so wish).
  2. reasons are given and they prove to be erroneous, that does not generally enable the adjudicator's decision to be challenged.
  3. adjudicators often are not required to give reasons at all.

(4) If an adjudicator is requested to give reasons pursuant to paragraph 22 of the Scheme, in my view a brief statement of those reasons will suffice. The reasons should be sufficient to show that the adjudicator has dealt with the issues remitted to him and what his conclusions are on those issues. It will only be in extreme circumstances, such as those described by Lord Justice Clerk in Gillies Ramsay, that the court will decline to enforce an otherwise valid adjudicator's decision because of the inadequacy of the reasons given. The complainant would need to show that the reasons were absent or unintelligible and that, as a result, he had suffered substantial prejudice.'

The judge also concluded that paragraph 20(c) of the Scheme gave the adjudicator a freestanding power to award interest.