Adjudication Update

In Austen Hall Building Ltd v Buckland Securities Ltd, HHJ Bowsher QC ruled that adjudication is not a tribunal in which legal proceedings can be brought. Therefore, unlike courts or public authorities, the adjudicator was not bound by the 1998 Human Rights Act to act in a way which was not incompatible with a convention right. HHJ Bowsher QC did reconfirm that the rules of natural justice did apply to adjudication. These were similar to the rights available under the ECHR.

The judge noted that if it were necessary for a successful party to take enforcement proceedings, then there would be a public hearing before the decision could be enforced. This being the case, all the requirements of Article 6 would then be satisfied.

It was also suggested by the defendant that the statutory requirement to reach a decision within 28 days was contrary to Article 6 of ECHR. The judge rejected this, saying that the adjudicator was bound by the time limits imposed by the HGCRA.

In edition 4, we reported on the same judge's decision at first instance in Discain v Opecprime. This matter in fact went to a full hearing. The adjudicator filed a witness statement and was called by the court so that he could be cross-examined.

One of the main complaints related to telephone conversations between the adjudicator and representatives for one of the parties. The judge suggested that it would make life "a great deal easier" if the adjudicator had declined to have had telephone conversations with individual parties to the adjudication. Whilst an adjudicator is permitted to take the initiative in ascertaining facts and the law, acting inquisitorially does not mean acting unfairly. The judge stressed the difference between telephone calls of a routine nature and those dealing with information. Whether this decision acts as a restraint to adjudicators who make full use of the power given to them under section 108.2(f) of the HGCRA remains to be seen.

HHJ Bowsher QC declined to enforce the decision because of the substantial breach of the rules of natural justice. Here, the adjudicator was not biased but on the facts, a fair minded and well-informed observer would conclude that there was a real possibility or danger that he was biased. A party must do more than merely assert a breach of the rules of natural justice to defeat the claim. The breach must be substantial and relevant.

Human Rights

In edition 7 we reported that the Divisional Court had ruled that the Environment Secretary's joint role as policy-maker and overall judge of planning applications was in breach of Article 6 of the ECHR, which guarantees the right to a fair trial. The HL, in Alconbury v DETR, has now unanimously upheld an appeal in favour of the DETR that the Secretary of State can retain his powers. The existing system was fair because decisions which were "called-in" to the DETR could still be challenged via judicial review.

In Wilson v First County Trust, the CA has for the first time, ruled that an existing statute, the 1974 Consumer Credit Act, was incompatible with the Human Rights Act. Due to a mistake in a loan agreement, a pawnbroker was not able to enforce the agreement and so Ms Wilson not only received back her car which she had pawned but the money she had paid for the loan, including interest and charges. The CA held that this was incompatible with Article 6 and Article 1 of Protocol 1 of the Convention. This exclusion of a judicial remedy was incompatible with Convention rights.

The making of this declaration had no immediate effect on the parties involved in the litigation. It created a power for the Government to take remedial action to amend the Act to ensure that it was compatible. This matter involved litigation between two private parties and no public authority was involved in the litigation. Therefore it may still be the case that a court will be obliged to consider, whether the rules of court and primary legislation are compatible with the Convention itself.

Cases From the TCC

In Alstom Combined Cycles Ltd v Henry Boot Plc and ACC v Aegon Insurance Company (UK) Ltd, HHJ Seymour QC had to consider the effect of a bond which stated that if under the Main Contract a "defects correction certificate" was issued then the obligation under that bond would be null and void. Under the contract, issuing a certificate was proof that the works were complete to the satisfaction of the engineer.

Disputes had arisen which were referred to arbitration. The completion certificate was then issued and Aegon sought summary judgment contending that the issue of the certificate had made the obligations under the bond null and void. ACC and HB sought a stay. The judge held that as arbitration proceedings had been commenced; it was not possible to establish the date of completion as specified in the correction certificate. Further, the claim was made on the bond at the time and date specified in the certificate.

If a party seeks a stay of proceedings on the grounds that issues in those proceedings duplicated to a certain extent issues already live in arbitration proceedings, then a stay will only be granted if there is an arguable defence to the claim in the proceedings and the defence raised issues which already the subject of the same proceedings. This was the case here. Therefore, it was right, proportionate and in the interests of justice to grant such a stay.


In Tasci v Pekalp, the Employment Tribunal considered an employer's duty to non-English speaking refugees. Here, the claimant, a Kurd was interviewed for a position as a machinist. He said that he had experience in Turkey of operating such machinery. He was employed on that basis but cut his hand as a result of incorrect operation of a saw. The Tribunal said that employers must treat such candidates, especially if they do not speak English, as if they have no experience at all and provide instruction to them on that basis. A prudent employer will assume that an applicant is desperate to gain employment and will say anything to do so. Little, if any reliance should placed on alleged experience.

Other Matters of Interest

The JCT has issued Practice Note 4, which provides a six-page summary of the principles of partnering. Practice Note 4 also includes a non-binding partnering charter for single projects which can be used with existing forms of building contract. The Note sets out the 4 key objectives namely delivery, team working, people and commercial. The cost is £8.50.

Other Cases of Interest

In Southampton Container Terminals Ltd v Hansa, the CA had to consider the approach to take to the measure of damages awarded to the claimant where it was admitted that one of the claimant's cranes had been negligently damaged. Was the claimant entitled to recover damages based on the costs of reinstatement of the crane or upon its lower second-hand value? The relevant costs were agreed.

The CA said that whether the reinstatement value was the appropriate measure of damage depended upon whether it was reasonable for the claimant to insist upon reinstatement and whether the amount was objectively fair between the parties. This test applied whether the breaches alleged were of contract or tort.

Whilst what the claimant ultimately did with any damages was not relevant, the claimant's intentions to reinstate or not were relevant to the question of reasonableness. Here, the CA agreed with the judge at first instance that it would have been unreasonable to replace the crane which had in fact been destroyed. The claimant had not replaced the original crane but, before the accident had occurred, had signed a contract for delivery of two larger cranes to go in the same berth. There was no actual need for the original which was destroyed. If the claimant received the reinstatement value, it would be receiving an entirely gratuitous benefit, which would be unreasonable.

In Veba Oil Supply v Petrotrade Inc, Morison J had to consider the effect of a contractual requirement that the quality of oil was to be tested by an independent expert. The expert applied a method of testing different from that stipulated in the contract, which meant that the claimant both bought the oil from the defendant and sold it on as if it were of a different density. The defendant sought summary dismissal of the resultant claim. The judge held that the expert had used the wrong method to determine the quality of the oil but the parties had not agreed to be bound by this method. The failure to use the contractual method of testing was a material departure, which meant that the expert determination was invalid.

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