The long running saga of Harding and Paice has been before the courts again for another adjudication enforcement application, in a decision handed down on 5 August 2016. This time, it was Paice attempting to enforce an adjudicator's decision. The application provides a useful summary of the law in three key areas of adjudication enforcement.
This case is an example of the use of serial adjudications; this was the fifth adjudication between the parties. The potted history is:
- Paice (the Employers) appointed Harding (the Contractor) to construct and fit out two residential houses at a site in Purley, Surrey
- The contract was the JCT Intermediate Building Contract 2011, with adjudications to be conducted using the Scheme for Constructions Contracts 1998 (as amended) (the Scheme).
- Each party has purported to terminate the contract
- Adjudication 1: the Contractor claimed payment of an interim application; the Contractor was successful and was awarded £8,252.72 by the adjudicator
- Adjudication 2: the Contractor claimed payment of a further interim application; the Contractor was successful and was awarded £249,769.59 plus VAT and interest by the adjudicator
- Adjudication 3: the Contractor claimed payment in respect of its account following termination; the Contractor was successful and was awarded £397,012.48 by the adjudicator
- Adjudication 4: the Employer claimed a valuation of the Contractor's works as at termination of the contract and sought repayment of any sums it had overpaid to the Contractor. The Employer essentially was seeking to recover the sums in adjudication 1-3.
This led to two applications to court:
- an unsuccessful application by the Contractor for an injunction to prevent this adjudication, on the basis the dispute had already been decided; and
- an unsuccessful application by the Contractor to enforce the adjudicator's decision of £325,484 in the Contractor's favour. The court refused to enforce this decision on the grounds of apparent bias by the adjudicator.
- Adjudication 5: the Employer re-ran Adjudication No. 4 (with a new adjudicator). The Employer was successful and awarded £296,006.44 by the adjudicator. The Contractor refused to pay and so the Employer sought to enforce the decision in the TCC.
The contractor's grounds for resisting enforcement
The Contractor sought to resist enforcement of the decision on three, fairly standard, grounds:
- The adjudicator's decision was late;
- The adjudicator showed apparent bias; and/or
- The adjudicator had exceeded his jurisdiction, by considering issues outside of the construction contract.
The Court disagreed with the Contractor on grounds (i) and (ii); it partially agreed with ground (iii) but was able to sever the decision.
Timing of decision
The Scheme provides that the adjudicator must reach his decision within 28 days of receipt of the Referral (paragraph 19(1)(a)). On the facts, that was 9 April 2016.
The Scheme allows that period to be extended to 42 days from receipt of the Referral, if the referring party consents (paragraph 19(1)(b)). On the facts, the Employer agreed to an extension to 21 April 2016.
The Scheme allows the period to be extended further provided that both parties agree (paragraph 19(1)(c)). On the facts, the adjudicator requested an extension to 27 April 2016. As this exceeded the 42 days provided for in paragraph 19(1)(b), this meant both the Contractor and the Employer had to agree. The Employer agreed; the Contractor also agreed but stated that agreement was without prejudice to the Contractor's position that the adjudicator had no jurisdiction. The Contractor therefore was unable to agree to an extension considering he did not agree that the adjudication was valid.
The adjudicator duly delivered his decision on 27 April 2016; the Contractor claimed this was late and therefore unenforceable. However, the Contractor did not maintain the argument it had taken in the adjudication, namely that the adjudicator had no jurisdiction.
The Court found in favour of the Employer; the Contractor had agreed to an extension of a week. The Contractor had not stated that, if it was wrong about the validity of the adjudication, then it did not agree to the extension. The Contractor therefore had clearly agreed to the extension.
The facts here are convoluted; as mentioned briefly above, the decision in the 4th adjudication had not been enforced because of apparent bias by the 4th adjudicator. The Contractor had subsequently made a complaint to RICS (the nominating body in the 4th adjudication) about the 4th adjudicator's conduct.
The 5th adjudicator had provided a general character reference to RICS in respect of the 4th adjudicator, but had not disclosed this when he was appointed in the 5th adjudication. The Contractor raised this as an issue 2 days before the 5th adjudicator's decision was due, asking the 5th adjudicator a number of questions about the reference.
The Court disagreed with the Contractor; the provision of a reference was not a conflict of interest and the 5th adjudicator did not need to disclose it (because the 5th adjudication did not involve any consideration of the decision of the 4th adjudicator). When the 5th adjudicator was asked questions by the Contractor, he responded immediately and was not defensive. The Court agreed that the 5th adjudicator's later response to further questions was "intemperate"; however that was in the context of an "unrelenting series of letters that went beyond reasonable questions designed to elicit information regarding his impartiality". Further, the Contractor had been aware of the relevant facts before the 5th adjudicator was appointed; however it had failed to raise them until 2 days before the decision was due.
In summary, the Judge confirmed the test for apparent bias was an objective one. She confirmed that, on the facts a fair-minded and informed observer would conclude that there was no real possibility that the tribunal was biased.
Severability of the decision
The Court agreed with the Contractor on ground (iii), that the adjudicator had exceeded his jurisdiction on one discrete point. However, the Court reiterated previously established case law that an adjudicator's decision is in principle severable. In this case, the adjudicator had identified and valued the part of the decision in question; the Court could therefore sever that part of the decision and enforce the remainder.
The Court therefore reduced the adjudicator's decision by £6,049.60 and enforced the remainder.
This long running dispute has so far provided a number of useful judgments on adjudications, including a judgment from the Court of Appeal. The latest instalment in the dispute provides a useful confirmation of the law on three important points which are often used to resist enforcement of an adjudicator's decision.