Yesterday evening the Society of Construction Law (SCL) hosted Coulson J’s talk, “The perfect adjudicator’s decision”, which was chaired by Paul Darling QC.
Coulson J suggested that he had never seen a perfect decision and, unless Kate Winslet was sitting as an adjudicator, the perfect adjudicator does not exist. Therefore, although entitled, “The perfect adjudicator’s decision”, this talk could just as easily have been called “What does it take to be a ‘perfect’ adjudicator?” or, perhaps, more to the point, “What should the decision include and what shouldn’t be in there?”. Instead, Coulson J opted for his “seven golden rules of adjudication”.
Coulson J noted that even if there is something wrong with a decision (and that is why it is before the court), the standard of decisions that he sees is still surprisingly high. He thought that this was all the more remarkable given the small amount of direction an adjudicator gets from the parties, especially when those same parties adopt tactics that tempt the adjudicator to make mistakes, or otherwise conduct themselves in an obstructive and difficult manner.
Seven golden rules of adjudication
Coulson J was addressing adjudicators and he set out his thoughts on what the adjudicator should do throughout the adjudication process, not just in terms of writing his decision, but also in managing the parties and dealing with the parties’ submissions and evidence. However, everyone will benefit from adopting and following them.
Rule 1: an adjudicator should be bold.
Adjudicators have a unique jurisdiction; one that has been created by the Construction Act 1996 and interpreted by the courts. For example, adjudicators can get things wrong (in law or fact), and yet their decision will still be upheld. As Chadwick LJ said in Carillion v Devonport,
“The need to have the ‘right’ answer has been subordinated to the need to have an answer quickly.”
Therefore, adjudicators should be encouraged to be bold, to keep Chadwick LJ’s words in mind and remember that adjudication should really be about ensuring payment is getting to the right people.
Rule 2: an adjudicator should address jurisdiction issues early and clearly.
Jurisdictional challenges are common in adjudication. Coulson J suggested that some of the parties’ challenges are bad, some are laughably bad but, just occasionally, adjudicators get it wrong.
Adjudicators should always deal with a jurisdictional challenge; they must not abdicate responsibility. They should apply commonsense when they look at any jurisdictional challenge. The worst thing that can happen is that an adjudicator doesn’t deal with the issue, the parties have their adjudication and then the matter ends up before the courts, where the adjudicator’s decision is not enforced. It is much better for the adjudicator to look at the issue properly at the outset, and resign if that is appropriate. Vision Homes is a cautionary tale for all.
Adjudicators who are involved in serial adjudications should read Benfield v Trudson. Despite encouraging adjudicators to be bold, this is one area where the exercise of caution may be warranted.
Adjudicators should also take care not to fall for the argument that they do not have jurisdiction because the responding party’s defence was not referred to in the notice of adjudication or the referral. While Coulson J suggested he would have decided Quartzelec differently, adjudicators should presume that they should always consider all of the defences presented to them.
Rule 3: an adjudicator should identify and deal with the issue.
It is important for the adjudicator to identify and deal with the issue(s) and all of the sub-issues. Ideally, the issues should be set out early in the decision, followed by analysis, and leading to the conclusion.
Adjudicators should give reasons for their decision, but should avoid being long-winded. Adjudicators should also remember that the more they say, the more the losing party has to work with, pour over and look for opportunities to challenge the decision.
Rule 4: an adjudicator should be fair.
It is easy to allege the adjudicator acted unfairly but, given the tight timetable, the need for an answer quickly surpasses the need for the right answer. If the adjudicator takes control of the timetable, and decides that he does not have time to deal with a submission, that isn’t necessarily unfair. While both parties should have an opportunity to answer the other party’s case, the parties do not have a never-ending right to respond to every submission. It should always be the claiming party who has the last word, just like in court litigation. See GPS Marine v Ringway and Amec v Thames Water.
Claiming that the dispute is too complex for adjudication may not help. The question is whether the adjudicator can deal with the dispute in the time allowed and do “broad” justice to the parties. If he can’t, he should say so.
One area where the adjudicator may overstep the mark on fairness is when he comes to a view that is different from the parties’ submissions on a point. The adjudicator should not decide something that hasn’t been put to him. What he should do is share his views with the parties, explaining why he has reached that conclusion and inviting their submissions.
Rule 5: an adjudicator should set out a clear result.
It is important that the adjudicator sets out clearly what his decision is. There should be no room for interpretation. Equally, the adjudicator’s summary of his decision should be consistent with the analysis in the body of the decision. Anything else allows the losing party to start looking for grounds to challenge the decision.
Rule 6: an adjudicator should “do it in time”.
In other words, adjudicators must get hold of the adjudication at an early stage and not allow the timetable to drift. In Enterprise, the adjudicator reacted to the parties, which allowed time to slip by from six weeks to three months. It should also go without saying that the adjudicator should reach and produce his decision within the time allowed.
Rule 7: an adjudicator should not make silly mistakes.
Bouygues v Dahl-Jensen established that the adjudicator could make a mistake, provided he answered the right question. Osborne v Atkin Rail has challenged that view. Coulson J suggested that Osborne had exceptional facts, but the carte blanche following Bouygues has now gone. Adjudicators must ensure that they do not make mistakes, and must ensure that the numbers in their decision add up.
What does this all mean in practice?
Coulson J is one of the TCC judges routinely dealing with the issues that arise on summary judgment applications to enforce adjudicators’ decisions (or applications for declaratory relief before, during and after an adjudication), so adjudicators and construction practitioners should take heed of his seven golden rules. While Coulson J gave no guarantees as to what may happen on enforcement if the parties do follow the golden rules, he suggested that there may be less chance of a refusal to enforce if they do.