Contact with adjudicators

By Victoria Russell, Fenwick Elliott

Paice & Anr v MJ Harding (t/a MJ Harding Contractors) [2015] EWHC 661 (TCC) (10 March 2015)

In Makers UK v Camden [2008] EWHC 1836 (TCC), Mr Justice Akenhead said:

“(1) It is better for all concerned if parties limit their unilateral contact with adjudicators both before, during and after an adjudication; the same goes for adjudicators having unilateral contact with individual parties. It can be misconstrued by the losing party, even if entirely innocent.

(2) If any such contact, it is felt, has to be made, it is better if done in writing so that there is a full record of the communication.

(3) Nominating institutions might sensibly consider their rules as to nominations and as to whether they do or do not welcome or accept suggestions from one or more parties as to the attributes or even identities of the person to be nominated by the institutions.”

Here, there had already been three adjudications. This case was an attempt to enforce the decision in adjudication four. Mr Justice Coulson said:

“If the procedural history of this matter is regrettable (four adjudications, one enforcement hearing, one injunction hearing and one on-going appeal to the Court of Appeal), the current disputes are nothing short of extraordinary, involving as they do allegations of apparent bias and defamation; two lengthy statements from the adjudicator expressed in trenchant terms, two statements from the adjudicator’s practice manager and wife; and allegations of telephone records fraudulently obtained. On that basis, this case might be thought to be many miles away from the “clear system of dispute resolution” promoted by supporters of adjudication during the debates in the House of Lords about the Housing Grants, Construction and Regeneration Act 1996.

There are two grounds of challenge to the summary enforcement of the decision in the fourth adjudication: apparent bias on the part of the adjudicator, and a lack of jurisdiction, because it is said that he purported to decide something which had already been decided (in completely contrary terms) in the third adjudication …”

The adjudicator in adjudication four had previously been appointed in two of the first three adjudications. Some two months before the fourth adjudication, an hour-long telephone call had taken place between the claimant and the adjudicator’s office manager (his wife). The evidence showed that whilst there was some discussion about procedural matters, the call went further, with the claimant noting how dissatisfied they were with their previous advisors, discussing issues related to the first two adjudications as well as the final account which was to be the subject of adjudication four. No file note was made. There was a further telephone conversation the following day, in which the claimant asked the office manager for details of people who could assist them in their final account dispute. The adjudicator knew about this conversation but did not disclose details of it either at the time of his appointment or later on when specifically asked about it during adjudication four.

The first question for the Judge was whether the adjudicator should have written to the parties, disclosing the conversations, and asking if they had any objections to his continuing to act. Mr Justice Coulson thought that it was “self-evident” that those conversations should have been disclosed.

They were material conversations, which included discussion about the final account with one party, and fairness required that the existence of those conversations should have been disclosed once the adjudicator learnt of his appointment. It did not matter that the call was with the practice manager. Nor did it matter that there was a two-month gap between the call and the adjudication. What mattered was not the timing, but what the conversation was about. The Judge said that the long call should not have taken place at all and should have been curtailed at the outset. Once it had proceeded, a detailed file note should have been made. Finally, the adjudicator had had a second opportunity to reconsider and disclose the conversation but did not do so. This led the Judge to conclude that a fair-minded observer would consider that there was a real possibility that the adjudicator was biased. Accordingly, the claimants’ claim for summary judgment failed.

In his judgment, Mr Justice Coulson set out a helpful summary of the law relating to apparent bias, the test for which was set out by Lord Phillips in his judgment in Re Medicaments and Related Classes of Goods No 2 [2001] 1WLR 100:

“… The Court must first ascertain all the circumstances which have a bearing on the suggestion that the Judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the same, that the Tribunal was biased”. He went to say that “The material circumstances will include any explanation given by the Judge under review as to his knowledge or appreciation of those circumstances. Where that explanation is accepted by the applicant for review it can be treated as accurate. Where it is not accepted, it becomes one further matter to be considered from the viewpoint of the fair-minded observer. The Court does not have to rule whether the explanation should be accepted or rejected. Rather, it has to decide whether or not the fair-minded observer would consider that there was a real danger of bias, notwithstanding the explanation advanced”.

This approach was subsequently approved by the House of Lords in Porter v McGill [2002] AC 357, save that Lord Hope deleted the words “or a real danger” and focused simply on whether or not there was a real possibility that the Tribunal was biased.

Mr Justice Coulson continued as follows:-

“18. In Lanes Group plc v Galliford Try Infrastructure Ltd [2011] EWCA Civ 1617, Jackson LJ noted that the fair-minded observer must be assumed to know all relevant publicly available facts; must be assumed to be neither complacent nor unduly sensitive or suspicious, must be assumed to be perspicacious, and must be able to distinguish between what is relevant and what is not relevant. Moreover, he must be able to decide what weight should be given to the facts that are relevant. Jackson LJ noted that there were conceptual difficulties in creating a fictional character, investing that character with this ever growing list of qualities and then speculating about how such a person would answer the questions before the Court. He said the obvious danger was that the Judge would simply project on to that fictional character his or her personal opinions. However, he accepted that the approach involving the fair-minded observer was established by high authority and was therefore the exercise that had to be undertaken in cases where apparent bias was alleged.”

The Judge reviewed various cases in which unilateral communications between the Adjudicator and one of the parties had given rise to sustained allegations of apparent bias and then considered the RICS Guidance, which was applicable in this instance as the Adjudicator in question had been appointed by the RICS. That Guidance stated as follows:-

“2.1.4  Adjudicators considered suitable for nomination are approached and asked to confirm …

•    That no significant involvement exists or has existed in the last five years either personally or within the organisation with either party to the dispute …

In deciding whether to agree to be nominated it is recommended that respective nominees take into consideration and disclose all matters that might give rise to the possibility or appearance of bias. They are required by RICS to disclose every matter which could reasonably be considered to create a conflict of interest. However, even matters over five years old may constitute a potential conflict of interest; if there is any doubt as to whether a connection with a property, a party, or a representative of a party might give rise to a conflict of interest RICS expects it to be disclosed.

The test as to what constitutes a conflict of interest is an objective one. It is not restricted to specific conflicts that surveyors themselves may have. It extends to the partners and others in their firm or organisations.

3.1.5    Communication with the Adjudicator

It is not recommended that adjudicators speak to or meet with a party alone concerning substantive matters and any conversations should be limited to procedural matters only. In circumstances where adjudicators do meet or talk to a party without the other being privy to the conversation, their actions must be seen as being fair. It is therefore essential in such circumstances to ensure that they personally make the other party aware as soon as is practicable what went on in sufficient detail, together with the impressions and/or views that they have formed as a result to enable the other party to address them”.

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