Adjudication Update

Whilst there continues to be a steady stream of cases resulting from applications to enforce adjudicator's decisions, Fenwick Elliott recently successfully obtained a Declaration on behalf of a client to restrain a Referring Party from taking any further steps in a matter where the Court found that the Adjudicator did not have jurisdiction.

In John Mowlem & Co plc v Hydra-Tight Ltd, 6 June 2000 HHJ Toulmin CMG QC agreed that the Claimant had the right to include in its standard form of contract a provision providing for the appointment by the Claimant of an adjudicator from its chosen list, here, the barristers at Atkin Chambers. The Defendant, who had already commenced an adjudication but who had not complied with the contractual provisions for choosing the adjudicator, suggested that the attempt by one party to reserve for itself the nomination of the adjudicator created the potential for bias. It also suggested that the list had to physically exist. Both of these objections were dismissed. The latter on the basis that identification was clearly possible from the description and that it was possible for the other party to object to a proposed adjudicator on the basis of perceived conflict of interest. The judge also noted that if only some of the Adjudication provisions within a contract are compliant with the Scheme then that is not enough. You cannot cherry pick clauses. Either the contract is compliant or the Scheme applies.

Under the Scheme, the key question on appointing is whether anyone is specified in the contract to act as the adjudicator. Here, the Claimant's proposed list did provide that identification. The person specified in the contract was the member of Atkin Chambers selected by the contractor when the dispute arose.

In addition, both parties agreed that the contract provisions, which required the service of a Notice of Dissatisfaction prior to the commencement of an adjudication, were unlawful since they contradicted the statutory requirement that adjudication can be commenced at any time.

In another case concerned with the practicalities of the HGCRA, the Scottish court has provided guidance on Section 111 and withholding notices. In Strathmore Building Services Limited v Colin Scott Grieg, an opinion of the Outer House, Court of Session 25 May, Lord Hamilton found that a withholding notice must be in writing to comply with section 111 and that to be effective, you cannot rely on a communication in writing sent before the issue of the relevant application as your withholding notice. You can refer to that prior communication as part of the notice, but you cannot seek to suggest that it is a substitute for the notice itself.

Fenwick Elliott have successfully acted for a number of Claimants in Enforcement Applications. The decision of Mr Justice Dyson in Herschel Engineering Limited v Breen Properties Limited has been widely reported. The Court confirmed that a notice to Adjudication can be made at any time notwithstanding that litigation or arbitration might be ongoing. There may be strong tactical grounds for taking such a step.

In another case, Bloor Construction v Bowmer & Kirkland, HHJ Toulmin CMG QC, in a decision, which will no doubt be welcomed by everyone concerned with the Adjudication process, has ruled that a term can be implied into adjudication agreements giving an adjudicator the power to correct decisions containing accidental errors or omissions or to clarify any ambiguity. This power must be exercised within a reasonable time and must not cause prejudice to either party.

Finally, in what may seem a surprising decision, in Bridgeway Construction v Tolent Construction, Mackay J upheld a contractual provision which provided that the referring party would be responsible for all the costs of any adjudication. Although it was contended that such a provision might inhibit smaller parties from pursuing adjudication, the judge noted that here the contract had been freely negotiated by the parties and that further the HGCRA is silent as to costs.

If you are looking to know more about Adjudication or want to catch up on the latest developments, the website is one of the best places to look. Backed by Fenwick Elliott amongst others, it not only has full details of all the reported decisions of the TCC but also provides practical assistance on all aspects of the adjudication process.

Health & Safety

Health & Safety in the construction industry is gaining an ever-increasing profile. There have been an increased number of prosecutions by the Health & Safety Executive and the Lord Chancellor has recently announced plans to increase the penalties available to the Courts.

Recent case law has included, R v Cardiff City Transport Services, where the CA reduced a fine levied on the Defendant from £75,000 to £40,000. An employee was accidentally run over and died. One of the factors, which led the CA to reduce the level of the fine was the finding that the breach of duty was a genuine oversight. There was no deliberate (for example through cost cutting) failure to maintain adequate safety standards. If there had been, the fine would not have been reduced.

On the other hand in R v Supremeplan Ltd, the CA was prepared to take a harsher line. The accident, an employee suffered burns, had been waiting to happen, particularly since the company had failed to take account of warnings from employees. That said any fine should take account of a company's means. Here the fine was reduced because the original fine had been wholly beyond the company's ability to pay.

In Makepeace v Evans Brothers and Alfred McAlpine a painter was injured when a scaffolding tower he was working from toppled over. The CA held that as the tower was an ordinary frequently used piece of site equipment, the responsibility for ensuring its safety lay with the employer of the painter, Evans, and not the main site contractor, McAlpine.

Recent TCC Decisions

Bovis Lendlease v Braehead

Here, Mr Justice Dyson, dismissed a Claim for Summary Judgment. The test is whether or not the Defendant has a real likelihood of succeeding. The aim of CPR 24 is to try and save costs. Therefore if a Defence is served which makes it clear that the Defendant does have a real prospect of succeeding any claim for Summary Judgment should be withdrawn.

R Durtnell & Sons v Secretary of State for Trade and Industry

Here the Claimant sought the appointment of an Arbitrator pursuant to Section 18 of the 1996 Arbitration Act, a power within the discretion of the court. HHJ Toulmin CMG QC held that that discretion had to be consistent with the principles set out in the Act and the discretion of the court. The application would be refused if the court considered that it was impossible to obtain a fair resolution by an impartial tribunal and without unnecessary delay or expense. If those principles were satisfied, the court would implement the parties' agreement as to how their disputes were to be resolved subject only to such safeguards as were necessary in the public interest and set out in the 1996 Act. The court retained a residual discretion to refuse to grant the remedy if a party had neglected his right to seek it. Here, there was no suggestion that it would have been impossible to obtain a fair resolution of the dispute or that the arbitrator would not have been impartial. The arbitration could be completed without unnecessary delay or expense. Durtnell had not delayed for so long in seeking a remedy or regarded the remedy so poorly that it would be wrong for the court to allow Durtnell to seek that remedy.

Fenwick Elliott is not alone in the world as a specialist Construction Law practice. A number of such specialists have now formed the International Construction Law Alliance, which will enable increased co-operation around the globe. Other founder member firms are:

Peckar & Abramson with offices in New York, New Jersey, San Francisco and Miami;
Lovegrove Solicitors with offices in Melbourne and Sydney;
Rozemond Van Ramshorst Smit with offices in Amsterdam;
Chan Tan & Partners with offices in Singapore; and
Jewkes Chan & Partners with offices in Hong Kong, Beijing and Tianjin.

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