When I read Edwards-Stuart J’s judgment in Hyder v Carillion, two things struck me:
- The court saying that it is the decision of the adjudicator that is binding, not his reasoning.
- The question an adjudicator should ask himself as to whether he should share or put his approach or interpretation to the parties?
This post considers the first point. I’ll save the second, “walking a tightrope” point, for another day.
Reasons do not bind
The Scheme for Construction Contracts 1998 does not require an adjudicator to give reasons, unless one of the parties requests them. They almost always do.
It is also the case that a defect in the adjudicator’s reasoning will rarely provide a basis to resist enforcement of the adjudicator’s decision. As Clerk LJ said in Gillies Ramsey Diamond v PJW Enterprises  BLR 48, a challenge will only succeed if the reasons are “so incoherent that it is impossible for the reasonable reader to make sense of them”.
What’s in the decision?
In Hyder, Edwards-Stuart J suggested that when considering the question, “what does the decision of the adjudicator” mean, one could look at a simple example. If the adjudicator decides A owes £X to B, it is clear that the adjudicator’s decision is that A owes a quantified sum of money to B. But if the money was owed to B because B was entitled to an extension of time and prolongation costs, he said that the period of the extension of time would also be part of the decision and binding on the parties (how else would the prolongation costs be calculated?).
He concluded that an adjudicator’s decision consists of:
- The actual award.
- “…any other finding in relation to the rights of the parties that forms an essential component of or basis for that award”.
It is hard to disagree with this but, in practice, things aren’t as black and white as this example. Often it is hard to interpret what exactly an “essential component” is. For example, in WH Malcolm Ltd, Re Judicial Review, the Scottish court distinguished the first adjudicator’s reasoning from her decision, with the second adjudicator bound only by the decision and not the reasoning. This meant that the first adjudicator’s views on a method of measurement, SMM7, did not bind the second adjudicator.
At the time, I said that I thought the first adjudicator’s finding made on SMM7 would be relevant to the question of valuation and/or the question of whether a sum was due. I appreciate the court disagreed with me and found otherwise. I wonder whether, after Hyder, that would still be the case.
In Hyder, Edwards-Stuart J held that the adjudicator’s calculation of the Target Cost was not part of his decision, and so did not bind the parties in any future adjudication. Going forward, neither party is prevented from adjudicating either the pain/gain share they think they are entitled to, or the correctness of the adjudicator’s calculation of the Target Cost.
I try to keep things simple. I only make a finding on a point if it is in issue and it is relevant to the matter I’m deciding. So, if I need to interpret the contract because it is in issue, then I expect my decision and findings on that to form part of my decision. In contrast, if I include findings that do not need to be there, I fully expect that they will not form part of my decision and will not be binding on the parties.
See, it is all just shades of grey!