REUTERS | Mukesh Gupta

“But it’s not fair…” “Now, now, don’t be silly”

In the recent decision in Rydon Maintenance Group v Affinity Sutton Housing Ltd, HHJ Raeside QC gave short shrift to a party opposing enforcement of an adjudicator’s decision on the basis of a lengthy catalogue of gripes about the unfair conduct of the adjudication.

Rydon Maintenance Ltd v Affinity Sutton Housing Ltd

Rydon’s claim was a simple one. It was a maintenance and minor works contractor, engaged by Affinity on a “costs plus” basis. It had under-invoiced over a period of several years and had not recovered all of it costs (and so had missed out on some of the “plus”).

It had engaged a forensic accountant to identify the extent of the under-invoicing and invited Affinity to engage. Despite several offers, Affinity declined whereupon Rydon commenced an adjudication. The first adjudication came to an early end when Affinity engaged a team of three counsel who raised all manner of jurisdictional issues, including that Rydon had used the wrong nominating body. Rydon saw merit in that point and halted that adjudication before immediately recommencing the second. This time it used the RICS as the nominating body since Affinity insisted that was correct. Tony Bingham was appointed as adjudicator. The rules governing the adjudication were the CIC model adjudication procedure (5th edition, 2011) (the CIC/MAP rules).

Challenge on jurisdictional and procedural grounds

Having fought hard to disrupt the process on jurisdictional as well as procedural grounds, Affinity was ultimately unsuccessful and opposed enforcement of the £2.3 million decision. Its grounds were:

  • Failure to follow the parties agreed procedure
  • Breach of the rules of natural justice.
  • Apparent bias.

Almost without exception, every aspect of the adjudicator’s conduct was the subject of criticism. The most notable complaints were that the adjudicator had:

  • Ignored the parties agreed directions.
  • Dispensed with the direction for Rydon to serve a reply.
  • Held a unilateral meeting with Rydon’s expert.
  • Not required Rydon to answer 90-odd questions put by Affinity to Rydon’s expert before the final meeting.
  • Predetermined various matters by issuing “preliminary indications” and “observations”.

The judgment sets out the chronology of the adjudication, the complaints made and the judge’s conclusions for rejecting each and every one of them, both individually and when taken as a whole.

The adjudicator’s process was held to be entirely in accordance with the rules and there was no apparent bias or lack of impartiality and no pre-determination.

The CIC/MAP rules

The court’s starting point was the CIC/MAP rules that governed the adjudication. The “General Principles” section states that:

“The object of an adjudication is to reach a fair, rapid, inexpensive decision upon a dispute arising under the Contract and this procedure shall be interpreted accordingly.” (Clause 1.)

and that:

“The Adjudicator may take the initiative in ascertaining the facts and the law. He may use his own knowledge and experience…”

The rules went on to deal with the “Conduct of the Adjudication”, which required the service of a referral notice and a decision within 28 days (or such longer period as is agreed). Importantly, clause 17 gave the adjudicator “complete discretion as to how to conduct the adjudication”, including to “establish the procedure and timetable”. Clause 17 went on to list examples of what the adjudicator could do, including:

  • Requesting a written response, further argument or counter-argument.
  • Requesting the production of documents or the attendance of people he considered could assist.
  • Visiting the site.
  • Meeting and questioning the parties and their representatives.
  • Meeting the parties separately.
  • Limiting the length of time for submissions.
  • Proceeding with the adjudication and reaching a decision even if a party failed to comply with the adjudicator’s requests or directions.
  • Issuing further directions as he considered appropriate.

“…rapid, inexpensive but also, of course, fair”

The court found that these rules required the adjudicator to produce a decision that was fair, but was also rapid and inexpensive. Emphasis was placed on the process entitling the adjudicator to take the initiative. A distinction was drawn between the interrogatory process of adjudication and the more adversarial processes common in court or arbitration. The court concluded that the CIC/MAP rules required a referral notice and thereafter left the procedure to the adjudicator to determine. Provided that the procedure adopted was “rapid, inexpensive but also, of course, fair”, what the adjudicator considered appropriate was acceptable. There was no system of pleadings or presumptions as to conduct.

The conduct of the adjudication and the many allegations of a breach of the rules of natural justice were to be determined against the applicable CIC/MAP rules, which gave the adjudicator complete discretion as to the procedure (save for serving the referral notice), including the holding of separate meetings. Provided the procedure adopted was fair, a party could not insist that its demands and availability be accommodated within the confines of the adjudication.

Variation of the CIC/MAP rules?

Affinity had argued that because Rydon had indicated its consent to proposed directions that were then made, the CIC/MAP rules were varied, and this removed the adjudicator’s discretion. That argument was rejected.

The court considered whether it was possible to vary the adjudication rules and how such variation might be achieved. There could be implied terms that could be added to the dispute resolution clauses. Another way could be if the parties wished to vary the agreed terms during the course of the reference. Any such variation should be notified to the adjudicator in such a way that the appointed adjudicator understood and appreciated that the applicable rules had been changed, giving him the opportunity to either accept the variation (and the revised terms of his appointment) or reject them.

Adjudicator acted unfairly?

This was a case in which almost without exception the responding party took exception with the adjudicator’s conduct, including making direct accusations of unfairness against the adjudicator. At the outset of the final meeting, there was a lengthy discussion between the adjudicator and Affinity’s leading counsel about bullying and silliness. The reader might like to think that this debate (described by HHJ Raeside QC at paragraph 78 of the judgment) is the subject of Mr Bingham’s article in on 6 May 2015. The writer (counsel for Rydon) couldn’t possibly comment!

Adjudication is not perfect

Affinity’s swathes of complaints were dealt with robustly by the adjudicator and found no favour with HHJ Raeside QC on enforcement. Had the responding party succeeded, it is likely that all adjudications would be besieged with complaints and accusations of unfairness (perhaps more so than is already the case).

This decision shows that adjudication is not a perfect form of dispute resolution. What this decision makes clear is that the procedure is governed by rules that were agreed to by the parties (perhaps before they were in dispute and before they knew when the adjudication was to occur). However, they were agreed to and a party unhappy with the process cannot regain control by demanding that the adjudication is conducted in a manner more convenient to it.

If parties wish a more leisurely or refined adjudication procedure, they are entitled to agree different procedural rules when first contracting. Such variations may also be permissible after an adjudicator has been appointed provided he is notified and able to consider whether he can or wants to continue within the different process agreed by the parties.

This decision heralds a warning to those already party to an adjudication to consider properly what the agreed procedural rules permit the adjudicator to do before crying foul at each and every turn.

4 Pump Court Jessica Stephens

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