In Pihl UK Ltd v Ramboll UK Ltd, the adequacy of the adjudicator’s reasons was among the issues that Lord Malcolm had to consider. It isn’t an issue that comes before the court very often and, as with previous judgments both north and south of the border, Lord Malcolm held that the adjudicator had given adequate reasons, there was no “obvious unfairness in the decision-making process”, and he had not breached the rules of natural justice. His decision was enforced.
What happened in Pihl?
In short, in Pihl the third adjudicator decided that he was bound by the second adjudicator’s decision. (The second adjudicator had decided that the parties’ contract included stage payments and the work had reached stage five.) He said Pihl had made on-account payments to Ramboll, but when the contract mechanism was properly applied, the outcome was a significant overpayment to Ramboll, in the region of £273,000, which he ordered to be repaid.
Ramboll wasn’t keen on the idea that it had been overpaid and should repay this money. In the enforcement proceedings that followed, it resisted making payment by arguing that the adjudicator had failed to explain aspects of his decision, which amounted to a breach of the rules of natural justice.
Lord Malcolm’s judgment
In arriving at the conclusion that there was no breach, Lord Malcolm came out with a few choice statements, which I think warrant repeating here. For example:
- When referring to Ramboll’s “attack” on the third adjudicator’s decision, he said it was “without merit” because:
“An adjudicator’s award is not expected to demonstrate the same quality of reasoning as that of a judge.”
- He went on to add that:
“If challenged [the adjudicator’s decision] should not be subjected to an overly analytical or critical scrutiny.”
- When looking at the adjudicator’s decision, the court should avoid reviewing the merits:
“The court should resist any temptation to ask itself – was the adjudicator’s reasoning correct?”
- He considered how the third adjudicator had reached his conclusions on the overpayment point and said:
“There is no real doubt or uncertainty as to [the third adjudicator’s] reasoning, nor as to the basis upon which he calculated the amount of the overpayment.”
All good stuff I’d say!
Reasons for the decision
I’m sure most practitioners will be unsurprised at the outcome here, just as I’m sure most adjudicators would agree with me that reasons are part and parcel of their decisions.
It’s no secret that including reasons helps the adjudicator write his decision. It ensures his thinking is clear and logical. We may not be required by statute or the Scheme for Construction Contracts 1998 to provide reasons, but nowadays it is unusual for adjudicators not to set out the reasoning behind their findings. In fact, those of us who are members of the RICS are advised to include reasons in their decisions (see guidance note, Surveyors acting as adjudicators in the construction industry). Providing reasons also helps the parties to understand why the adjudicator has reached the conclusions he has.
