The principle that an adjudicator should not go off on a frolic of his own is clear and well established. If he does, he breaches the rules of natural justice and his decision will not be enforced by the courts. Many examples exist in the law reports of what happens when the adjudicator veers away from the parties’ submissions, starts relying on his own knowledge and expertise and, somewhere in the process, crosses the line. It may sometimes look like a fuzzy line, even to regular users of adjudication, but there is still a line that should not be crossed.
It’s a fuzzy line
Crossing the line is something that I have written about on a number of occasions, for example when the adjudicator chose a particular method to assess the sum due to the contractor in a final account claim (see Adjudication “torpedoed” by adjudicator’s frolic, which discussed the judgment in Herbosh-Kiere Marine v Dover Harbour Board).
By contrast, an adjudicator using his own knowledge and experience isn’t always a breach of the rules of natural justice, such as happened in Hyder Consulting v Carillion (see Assessing the evidence and using your own judgment).
Prior knowledge may be unhelpful
The issue came up again last summer in Farrelly v Byrne Brothers (which I discussed at the time) and ABB Ltd v Bam Nuttall Ltd (which Jonathan considered), with very different outcomes:
- In Farrelly, Ramsey J held that there was no breach of the rules of natural justice when the adjudicator interpreted the compensation events clause in the parties’ NEC3 sub-contract.
- In ABB, Akenhead J held that the adjudicator had breached the rules of natural justice when he relied on clause 11.1A of the parties’ sub-contract, which was concerned with variations to the contract.
Looking at these two cases objectively, it is clear that prior knowledge of something can be unhelpful, but only if that prior knowledge is used incorrectly. In Farrelly, the court acknowledged that adjudicators are appointed precisely because of their prior knowledge, but in ABB, the adjudicator’s prior knowledge was his undoing, since his familiarity with the parties’ standard form contract meant he was able to consider elements of it that the parties had not raised in their submissions.
Sharing your thoughts with the parties
However, what also stands out from these two judgments is how important it is for an adjudicator to share his approach with the parties. In ABB, by not inviting their submissions on the point before reaching his decision, the adjudicator crossed the fuzzy line. By contrast, in Farrelly, the adjudicator did share his thinking with the parties, at least insofar as he invited submissions from them on a particular point. One of the parties may have been unhappy with his interpretation, but at least he let them in on what he was thinking, so didn’t trip over the fuzzy line.
Sharing his thoughts was also what the adjudicator did in Brims Construction Ltd v A2M Development Ltd, a case that followed a few months later. On this occasion, Akenhead J held that the adjudicator was not in material breach of the rules of natural justice. Instead, he held that the adjudicator had behaved properly by asking the parties for their submissions on a point he considered had not been fully addressed in their submissions. As Jonathan noted at the time, Akenhead J said that the challenge was argued “without much justifiable conviction”, and gave it short shrift.
Is it too late to share?
This all got me thinking about how an adjudicator should deal with a point he thinks about late in the process, say while writing his decision. In those circumstances, should the point or question be put to the parties and, if so, how should it be put? Alternatively, should the point be raised at all? Would it be better if the adjudicator disregarded the point because there isn’t time in the timetable to obtain further submissions on the point?
Tough call I’d say, and one that doesn’t have an easy answer. As with so many other things, it must depend on the facts. I’m sure it will not be long before we see the issue again before the courts, perhaps even dealing with my specific point.
