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If you throw enough jurisdictional and natural justice mud, will some of it stick?

Let’s be honest about it, Matt and I have been slightly spoilt over the past few months when it comes to adjudication enforcement cases to blog about. There has been a plethora of interesting cases streaming out of the TCC, and the latest instalment from Coulson J is CSK Electrical v Kingswood Electrical.

CSK Electrical v Kingswood Electrical

CSK was engaged by Kingswood to undertake electrical work to the executive boxes at Twickenham, the home of English rugby. Kingswood did not issue the requisite pay less notices and so CSK started two adjudications for payment of the sums claimed. CSK was successful.

However, Kingswood still didn’t want to pay up and, seemingly without any legal representation, went about crafting its case to resist enforcement. It appears to have taken the attitude that, if it threw enough jurisdictional and natural justice mud, at least some of it would stick. Let’s see if it did.

No crystallised dispute

The final date on which a pay less notice could have been issued was 11 December 2014. When Kingswood failed to issue a pay less notice, CSK’s representative wrote stating that if full payment was not made, adjudication proceedings would be commenced. Kingswood responded on 18 December 2014, stating that the claims were “unfounded and will be strenuously defended”. The adjudications followed.

As Coulson J noted:

“the crystallisation argument is almost never successful.”

Unsurprisingly, Coulson J said that he was in no doubt that a dispute had crystallised before the references to adjudication.

There was clearly no way that this jurisdictional mud was anywhere close to sticking.

Invalid appointment

When applying to CEDR for an adjudicator, CSK’s representative had stated:

“It is preferred that any of the adjudicators in the attached list are not appointed.”

Relying on Eurocom v Siemens, Kingswood argued that there had been a fraudulent misrepresentation such that the adjudicator’s appointments were invalid.

However, despite the statement made in CSK’s application, no list was actually attached. Therefore there was no false statement and, accordingly, no fraudulent misrepresentation. As such, while Coulson J stated that he understood why Kingswood had raised this challenge, he dismissed it.

The jurisdictional mud was certainly a bit tackier than the last challenge, but still not enough to stick.

Impact of Eurocom v Siemens

Before moving on, I want to pick up on a couple of comments that Coulson J made:

“There can be no doubt that the facts of Eurocom have shaken public confidence in the adjudication process.”

Eurocom has certainly exposed the practice of alleging that certain adjudicators had a conflict of interest when none existed for what it was; a pack of lies. To that extent, I agree with the judge that the public’s perception of representatives in adjudication may have been dented. However, some might question the extent to which the public’s confidence in the remainder of the process has been damaged.

Secondly, CSK argued that even if the list had been included with the application, it would not amount to a false statement because it was simply a statement of preference. This makes sense because CSK was not alleging a conflict of interest where none existed. Coulson J did not have to address this point, but said:

“There may be circumstances in which a stated preference could amount to a misrepresentation, but I take the point that this would never be very straightforward.”

I think that parties should take note of this statement because, while it would obviously depend on the facts, it is clear that the TCC might find that a misrepresentation has occurred simply if a stated preference is raised.

Adjudication timetable

Kingswood said that there had been a breach of the rules of natural justice because the adjudicator’s timetable was too quick and put too great a strain on its resources.

Coulson J said that such a claim had never to his knowledge succeeded, and this case was no exception. While he acknowledged that adjudication is carried out within a very strict timetable, he pointed out that this was:

“a fact of adjudication life; it is inherent in the whole process.”

Coulson J said that these were relatively simple disputes capable of being decided within 28 days, and noted that Kingswood had not complained about the timetable during the adjudications. He therefore dismissed Kinsgwood’s natural justice challenge.

Another case of the mud slipping off.

It is worth noting that this case ran over the Christmas holiday break and, as you will all know, in the UK construction adjudication continues during this period with the exception of the bank holidays. Personally, I think that it’s high time we amended the Construction Act 1996 to also exclude the period 27 to 31 December inclusive from the adjudication timetable, as is the case in certain Australian states such as New South Wales. Anyway, I digress.

Waiver

The next point was made by CSK.

Because the grounds for challenge had not been raised by Kingswood at the outset of the adjudication, CSK said that KIngswood had waived its right to rely on those matters. CSK also pointed out that Kingswood had paid the adjudicator’s fees and had applied under the slip rules to have the decisions corrected, thereby confirming the validity of the decisions.

Coulson J agreed with CSK and therefore, even if he was wrong on his previous findings, Kingswood had waived the challenges by way of jurisdiction and/or natural justice. Coulson J explained that the test for waiver for jurisdictional challenges and natural justice challenges are slightly different, but he was satisfied that both had been made out.

Kinsgwood had therefore lost its right to throw mud.

Stay of execution

Kingswood’s final shot was to ask Coulson J to grant a stay of execution because of CSK’s financial position. This was akin to asking the judge to throw his own mud, but Coulson J was satisfied that there was no evidence that CSK would be unable to repay the sums ordered by the adjudicator in later proceedings, and he therefore refused to grant the stay.

Summary

Kingswood’s mud throwing exercise, while admirable, is likely to turn out to be quite a costly exercise for it. It may have been better off spending that money on legal representation and challenging later applications for payment on their merits.

MCMS Ltd Jonathan Cope

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