Beumer Group UK Ltd ("Beumer") sought enforcement of an adjudicator’s decision against Vinci Construction UK Ltd ("Vinci") in relation to works Vinci had engaged Beumer to perform on the south terminal baggage handling system at Gatwick airport under an NEC 3 subcontract. Vinci sought to resist enforcement by alleging breach of natural justice and a risk that the fair minded and informed observer would conclude there was a real possibility of bias.
Vinci was engaged by Gatwick Airport Ltd as the main contractor, Beumer was the sub-contractor and Beumer had also engaged the services of a sub-sub-contractor Daifuku Logan Ltd ("Logan"). In March 2016, a dispute arose between Beumer and Vinci at the same time as a dispute arose between Beumer and Logan and Beumer referred both disputes to adjudication (“BV II” and “BL II”, respectively). The same adjudicator (“Dr Chern”) was appointed to act in both adjudications, but Vinci was kept in the dark about the existence of BLII and Dr Chern’s involvement.
On that basis, Vinci alleged the following breaches of natural justice:
- Dr Chern had acquired background knowledge concerning the subject matter of BV II from BL II;
- Vinci had been given no opportunity to consider that information and make submissions about it;
- It was unfair that no disclosure had been given to Vinci by Beumer of the material deployed, relevant to the Beumer-Vinci dispute, in BL II; and
- Beumer advanced factually inconsistent cases in the two adjudications.
Breaches 3) and 4) proved to be the decisive ones. Beumer’s adjudication against Logan (“BL II”) had included a claim by Beumer for liquidated damages based around Logan’s failure to achieve the condition of Airport Operational Readiness (“AOR”) by at least 12 April 2016. This was entirely inconsistent with the case advanced by Beumer in the adjudication against Vinci (“BV II”) that AOR had been achieved by 16 December 2015. Fraser J was critical of Beumer’s actions in the two adjudications, though he stopped short of actually describing the behaviour as fraudulent:
“The correct legal characterisation of that behaviour was not touched upon by either party before me, but I seriously doubt, for example, that a director of a company could sign a statement of truth in two sets of legal proceedings in such circumstances saying such quite different things on the same point. That alone should provide obvious direction to the industry of the type of behaviour that this constitutes.”
In response to Vinci’s allegations, Beumer submitted that there had been no obligation upon it or upon Dr Chern to inform Vinci of the existence or content of BL II and Vinci had no right to see the documentation before Dr Chern in that adjudication. Beumer also claimed that the substance of Dr Chern’s decisions showed that he had restricted himself to the material before him in each adjudication, so there was no breach of natural justice.
After considering the relevant authorities on the matter, Fraser J determined that there was a clear breach of natural justice. By parity of reasoning with Dyson LJ in Amec v Whitefriars and, more recently, Coulson J in Paice and Springall v MJ Harding Contractors, he considered that if a unilateral phone call between the adjudicator and one of the parties could lead to the appearance of sufficient unfairness to deny enforcement of the adjudicator’s decision, then there was no scope for arguing the case before him did not also have the appearance of sufficient unfairness:
“If unilateral telephone calls are strongly discouraged (if not verging on prohibited) due to the appearance of potential unfairness, it is very difficult, if not in my judgment impossible, for an adjudicator to be permitted to conduct another adjudication involving one of the same parties at the same time without disclosing that to the other party. Conducting that other adjudication may not only involve telephone conversations, but will undoubtedly involve the receipt of communications including submissions, and may involve a hearing. If all that takes place secretly, in the sense that the other party does not know it is even taking place, then that runs an obvious risk in my judgment of leading the fair minded and informed observer to conclude that there was a real possibility of bias. All of this can be avoided by disclosing the existence of the appointment at the earliest opportunity.”
This was also a case in which the breach of natural justice was “plainly material” as the “question of the correct date for AOR was central to considerations of delay, and delay was central to considerations of whether instructions were indeed compensation events.”
The breach of natural justice was therefore sufficient for Fraser J to deny the enforcement of the decision.
For more information please refer to the case judgement.