The Scottish courts call it “failing to exhaust your jurisdiction”. The English courts haven’t come up with a snazzy name like that, they just say the adjudicator failed to consider submissions before him or ignored aspects of a party’s submissions. It all boils down to the parties having a fair hearing and the outcome is the same. The adjudicator hasn’t done what was asked of him and his decision is unenforceable due to a breach of the rules of natural justice.
The topic has been before both the Scottish and the English courts recently.
SGL Carbon Fibres Ltd v RBG Ltd
In SGL v RBG, Lord Glennie found that the second adjudicator was wrong to exclude certain sums from his calculations (they had been determined by the first adjudicator). By doing so, Lord Glennie said the adjudicator had failed to complete the exercise that he was asked to carry out, namely to work out what the cumulative total paid was and whether the employer had made an overpayment to the contractor. (The adjudicator had also used his own knowledge and experience without giving the parties a proper opportunity to comment, but that’s another story.)
PC Harrington Contractors Ltd v Tyroddy Construction Ltd
In PC Harrington v Tyroddy, Akenhead J held that the adjudicator had failed to consider aspects of the sub-contractor’s defence (which it was proper for the sub-contractor to raise). He described the adjudicator as “unwittingly [falling] below the standards which are required to enable the decision… to be enforced”. It didn’t matter that the adjudicator had acted honestly when he decided to exclude the sub-contractor’s defence. By “ruling on his jurisdiction in such a way”, he “denied himself the opportunity to consider the merits of the exercise which [the sub-contractor] has asked him to determine”. That was a breach of the rules of natural justice.
Pilon et al
These two judgments follow in a long line of cases on this subject: I’m thinking of Quartzelec Ltd v Honeywell Control Systems, Thermal Energy v Lentjes, Pilon v Breyer and RBG v SGL (the first time around).
Addressing the issues
I rather like the Scottish term for all of this: “failing to exhaust your jurisdiction”. I think it sums up what the adjudicator has (or hasn’t) done quite nicely.
It has become fairly common for the losing party to complain that the adjudicator has failed to consider all or part of the issues that were set out in its submissions. Given the number of recent cases on this topic, it looks like there is often merit in what the losing party says.
As an adjudicator, it is important to ensure that your decision covers all the issues that have been referred to you. If you overlook a submission or part of the evidence (intentionally or inadvertently), then not only are you in danger of breaching the rules of natural justice, but you are providing ammunition for your decision to be challenged in enforcement proceedings. As Akenhead J said (in PC Harrington), it doesn’t matter that the adjudicator honestly believed the final account issues fell outside his jurisdiction, his “honest view was wrong” and he “committed a breach of natural justice”.
I rather like Akenhead J’s summary of the principles on breaches of the rules of natural justice in Cantillon v Urvasco. Coulson J also put it rather well in Pilon v Breyer, when he summarised the approach the adjudicator must take when considering and answering the question referred to him. I’d recommend these to anyone not familiar with them. Perhaps if more adjudicators were familiar with these principles, we’d see fewer examples of their work before the courts.
