I wonder if you, like me, sometimes get confused by the names and numbers of the Star Wars films. For those of us born before the 80’s there were only ever three: Star Wars, The Empire Strikes Back and Return of the Jedi. However, now the first film is called Star Wars: Episode IV – A New Hope, and we’ve had prequels and sequels. Personally, I’ve lost track.
A similar problem arises with the TCC adjudication enforcement cases involving the long-running battle between Gary Paice and Kim Springall (property developers) and MJ Harding (building contractor). This is our fifth blog on cases involving these parties, and the last two have been the Christmas special and the Prequel. I have decided to rename them in a Star Wars-esque fashion, and I will therefore refer to this as Episode V.
Episode V: a long time ago on a building site far far away…
I don’t intend to set out any details about the parties or the contract involved, as I’m sure you’re aware of them by now.
In the parties’ fourth adjudication (which I wrote about in Episode II – Coulson J Strikes Back) the adjudicator, Mr Sliwinski, decided that Harding had to pay Paice and Springall £325,484.00 based on his assessment of the contractor’s termination account. You may recall that Coulson J concluded that a fair-minded observer would consider that there was a real possibility that Mr Sliwinski was biased as a result of his failure to disclose conversations with one of the parties, his misleading answers to emails when asked about those conversations and the tone and content of his explanations and witness statements in the associated enforcement proceedings.
The fifth adjudication concerned the same issues as the fourth adjudication (that is, the valuation of the contractor’s account), and this time Mr Linnett was appointed the adjudicator (as he had been in the third adjudication, which was a successful “smash and grab” by Harding). This time Mr Linnett decided that Harding had to pay Paice and Springall £296,006.44, but Harding was having none of it and challenged the enforcement of Mr Linnett’s decision on three grounds, namely:
- The adjudicator’s decision was reached too late and therefore was a nullity.
- Apparent bias on the part of the adjudicator.
- Part of the decision was outside the adjudicator’s jurisdiction.
The case was heard by one of our two new TCC judges, Finola O’Farrell QC, albeit she was sitting as a deputy High Court judge at the time (hence why I have not referred to her as O’Farrell J).
Harding’s first challenge failed. For more analysis on this I refer you to the excellent blog written by counsel for Paice and Springall, David Sears QC and Charles Pimlott.
Harding’s third challenge succeeded in part, and the judge severed design fees of £6,049.60 from the adjudicator’s decision. The only point I want to make about this is that the judge commented on the difference between the scope of adjudication and arbitration clauses. Arguably, she reached a different conclusion to that of Sir Robert Akenhead in J Murphy & Sons v W Maher and Sons (which I wrote about back in May).
Apparent bias – the facts
It is Harding’s second challenge I want to focus on, the apparent bias point. As is explained in the judgment, after the third adjudication Harding made a complaint to RICS regarding Mr Sliwinski and RICS decided that there was a case to answer. As part of the disciplinary proceedings (which were eventually disposed of by a confidential consent order), Mr Linnett was asked to provide a reference for Mr Sliwinski, but he did not disclose this upon his appointment.
Mr Harding’s solicitor, Mr Davies, gave a witness statement saying that Mr Linnett had told him at a conference some months earlier that he had been asked to provide a reference for Mr Sliwinski, but Mr Davies did not raise this issue until two days before Mr Linnett’s decision was due when he asked a number of questions:
- How many times have you previously acted as a third party resolver (for example, as mediator, adjudicator, arbitrator or expert determiner) at the instigation of a party assisted or represented by Silver Shemmings LLP and/or any of its partners (past and present)?
- Have you read the judgment in Paice and another v MJ Harding (t/a MJ Harding Contractors)  EWHC 661 (TCC)?
- Did you feel sympathy towards Mr Sliwinski upon reading the above judgment, as a fellow adjudicator?
- To your knowledge, was there support for Mr Sliwinski amongst any adjudicators you know?
- To your knowledge, was there sympathy for Mr Sliwinski following the above judgment?
- Did Mr Sliwinski, or a party on his behalf, seek your assistance in regards to a complaint that Mr Harding made to the RICS regarding Mr Sliwinski?
- To your knowledge, did Mr Sliwinski or a party/parties on his behalf seek support and assistance from fellow practising adjudicators such as yourself to rebuff a complaint that Mr Harding had made to the RICS?
- To your knowledge, did Mr Sliwinski or another party or parties in any way speak disparagingly of Mr Harding to you and/or did your overhear the same?
Mr Linnett responded to those questions, and clarified that the reference he gave for Mr Sliwinski did not touch upon anything specific with regards to Harding; it only concerned Mr Sliwinski’s character. However, following Mr Linnett’s decision ordering Harding to pay significant sums, Mr Davies continued with his questioning on this matter and contended that it was a “serious issue” and a “misrepresentation by omission”. This culminated in Mr Linnett writing to Mr Davies on 25 May 2016 refusing to answer any further questions on the matter.
Apparent bias – the findings
In the enforcement hearing, Mr Harding argued that there was a real prospect that a fair-minded and informed observer would conclude that there was a real possibility or danger that Mr Linnett was biased. However, the judge didn’t agree, finding that:
- Mr Linnett did not have an obligation to disclose the fact that he had provided a general character reference for Mr Sliwinski to the RICS because he was not required to review or consider Mr Sliwinski’s decision in any respect. Therefore, Mr Linnett’s views of Mr Sliwinski were irrelevant.
- Mr Davies was aware prior to the commencement of the adjudication that Mr Linnett had been approached to provide a reference for Mr Sliwinski. The fact that Mr Davies did not raise this until two days before Mr Linnett’s decision was due demonstrates that he did not consider it to be material.
- When Mr Linnett was first asked about the reference he was not defensive and did not attempt to mislead or avoid the question. Although Mr Linnett’s response in his letter dated 25th May 2016 was “intemperate”, this “followed an unrelenting series of letters that went beyond reasonable questions designed to elicit information regarding his impartiality”. The circumstances of this case were “far removed” from those of the fourth adjudication or in Cofely v Bingham.
Therefore, a fair-minded and informed observer would conclude that there was no real possibility that Mr Linnett was biased.
Apparent bias – my thoughts
Since the Cofely judgment, allegations of apparent bias have been the flavour of the month, with disgruntled responding parties evidently seeing this as a way of avoiding the implications of adjudicators’ decisions.
Although the fourth adjudication and Cofely have demonstrated that, on occasion, such challenges can be justified, the circumstances of each challenge must be considered individually. On the facts of this fifth adjudication, it is hard to see how a case of apparent bias against Mr Linnett was ever going to succeed.
So what can be done about this?
Both James Bessey (in his article in Building) and Vincent Moran QC (in his article in the Adjudication Society Newsletter) refer to changes by appointing bodies, in particular when it comes to parties naming specific individuals that they want or don’t want to act as the adjudicator, as well as guidance for adjudicators.
I’m aware that the nominating bodies certainly now look more critically at requests for particular adjudicators, as well as lists of individuals said to have a conflict of interest. RICS is also in the process of updating its guidance on Surveyors Acting as Adjudicators in the construction industry that will include an expanded section on conflicts of interest.
Disclosure of involvements
However, when it comes to disclosure of involvements, the buck really does have to stop with the adjudicators themselves and the nominating bodies can only go on the information they have been provided with. The current draft of the updated RICS guidance on Surveyors Acting as Adjudicators contains this advice for adjudicators:
“The prospective adjudicator is required by RICS to disclose every matter which could potentially lead a fair minded and informed observer to conclude that there was a real possibility that they are biased. If there is any doubt as to whether an involvement with a property, party or representative of a party might give rise to a conflict of interest, RICS expects it to be disclosed both to RICS and to the parties if the prospective adjudicator is thereafter nominated.”
As was demonstrated in Cofely, disclosure of previous involvements with both parties and representatives is an important factor. In Cofely, 18% of the adjudicator’s work as an adjudicator and arbitrator over the previous three years had involved Knowles as a party or representative, amounting to 25% of his income for such tribunal work. This was one of the grounds that led to a finding of apparent bias. In Vincent Moran’s view:
“…the existing authorities now suggest that as little as 5% of income over previous 3 years might trigger a disclosure obligation and that 10% or more generally will.”
So, adjudicators need to consider whether previous involvements could fall into this category, and I think it’s probably sensible for adjudicators to err on the side of caution in this regard. For example, I am one of three adjudicators named in the sub-contract of a large UK main contractor. Whenever I am approached for an appointment, I set out how many times I have been appointed in disputes involving that main contractor over the previous five years.
However, as we all know involvements don’t just take the form of previously having acted as an adjudicator or arbitrator. Similar to the IBA Guidelines on Conflicts of Interest, the RICS guidance note Conflicts of interest includes a hierarchy of conflicts with examples under each category. Adjudicators should refer to this hierarchy of conflicts to determine whether an involvement could be considered a conflict of interest. However, as the case of W Ltd v M SDN BHD demonstrates that will not always be determinative (in that case the involvement landed squarely in the non-waivable red list, but was found not to constitute a conflict of interest).
Dealing with challenges
Another important lesson from Cofely is how adjudicators and arbitrators should deal with questions that may go to their impartiality. In Cofely another ground which led Hamblen J to make a finding of apparent bias was the “aggressive” and “hostile” manner in which the adjudicator dealt with the questions regarding his involvement with Knowles. Similar issues also caused problems for Mr Sliwinski in the fourth adjudication.
In the latest instalment, Ms O’Farrell QC clearly considered that one of Mr Linnett’s responses was “intemperate” (it had begun with the words “I am not going to dance to your tune”), but she excused this due to the nature of Mr Davies’ questions.
In his Building article James Bessey rightly points out that attack is not the best form of defence in such circumstances, and will likely lead to a worsening of the situation. James’s conclusion is spot on as far as I’m concerned:
“If matters are not disclosed at the outset and are then raised later, the correct approach appears to be a helpful neutral disclosure and leave it to others to work out the consequences of that which is disclosed: don’t go on the attack however emotional or personal it may feel.”
We will have to wait and see whether there will be an Episode VI. In the meantime, where’s my lightsaber?